Investing inside the Lottery over Mutual Funds???

Even though I am not an investment advisor and not hold myself out as one, clients carry on and ask me what to do to plan for retirement. Should I max out my 401(k) contribution? Should I do an IRA? Should I put more in my profit sharing plan or monthly pension?



Contrary to popular belief, none of those are wise investments. Why? Among other reasons, they all involve putting money into a great investment vehicle over which they have little control concerning investment and timing and many people wind up choosing Mutual Funds as his or her investment within these plans. In fact, putting your cash into the Lottery has to be better investment.



Really? The Lottery as a smart investment vehicle? Sound crazy? Gamble my retirement funds away in the government-sponsored game of chance where I have little chance of winning? Where millions of other folks are putting in money in hopes of winning the important one? Where most of the money visits someone else and the chances are strong that I will miss part or all of my money?



Wait a moment - shall we be held talking now concerning the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little probability of winning. Sounds like nearly the same as Mutual Fund investment in a very 401(k) or IRA. After all, what exactly are my odds of retiring on Mutual Fund investments? Not very high, actually.



A year or so ago, I was listening to a financial program on the radio walking on into work. The interviewer was asking the representative of a substantial Mutual Fund in regards to the performance with the Fund. The Rep responded that this Mutual Fund had risen in value by typically 20% a year for the prior two years. But if the interviewer asked concerning the average return to the normal investor in the Fund, the Rep responded the average investor had actually lost 2% a year. Why? Because of the timing of moving in and out of the market. Compare this towards the Lottery, where everyone understands the exact odds of winning and the exact amount that could be won!



But what in regards to the great tax advantages of putting my money in a 401(k) or an IRA? Yeah, right! Get a tax deduction when you're young and in a relatively low tax bracket in order to pay taxes around the money you adopt out when you're retired and in the higher tax bracket? Yeah, which is a good deal. Or, think about the difference in tax rates on capital gains and dividends in case you are not inside a 401(k) or IRA versus the standard income tax rates about the earnings if you pull them out of your 401(k) or IRA.



So you now are thinking that you need to just invest in Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds lead to capital gains taxes in the event the Fund Managers trade them while you don't see the bucks! You have to pay taxes however the Fund may actually have gone down in value! And what concerning the lost opportunity tariff of that money that you are now paying in taxes that you could have place into other investments? At least using the Lottery, you know the exact amount of taxes you could pay should you win and also you only have to pay taxes in the event you do win.



Yes, you say, however the Lottery is gambling and I don't have any control over whether I win or lose. You are right. The Lottery is gambling. But same goes with a Mutual Fund. You don't have any control over the stock exchange and neither does the Fund Manager. The market goes down, so does your Fund. At least you recognize you are gambling whenever you play the Lottery. You don't have the federal government, loan companies and your employer telling you that this Lottery is a superb investment. And your employer doesn't go so far about match the sum you put to the Lottery enjoy it might with your 401(k). Nobody is lying to you concerning the Lottery being gambling, but those invoved with positions of authority are lying to you in regards to the chances of success inside a Mutual Fund!



But surely, you say, there is a better potential for making money in a Mutual Fund than there is in the Lottery? Hardly. There may be less of a probability website of losing every one of the money you put in a Mutual Fund than there exists losing every one of the money you put to the Lottery. But you are never likely to win big inside a Mutual Fund. In fact, Mutual Funds are designed to minimize your returns by creating a "balanced portfolio." If they could minimize your risk in the market itself, this might be okay. But the problem is that nobody can minimize the risk with the market without sophisticated hedge strategies which are not typically utilized in Mutual Funds. At least with the Lottery, you have a probability of winning big. And you can sleep in the evening, as you aren't wondering if the odds of winning are going down overnight as a consequence of something that is situated Tokyo.



You say that you do not like the idea that a lot of of your Lottery gamblings 're going to support government programs? Where do you think most of the earnings from a Mutual Fund are getting? No, not to support government programs, but rather to support ignore the advisor's and also the Mutual Fund manager's retirement? You take all of the risk, you set in most of the capital, but the majority of the earnings from your Mutual Fund go for the Fund manager as well as your investment advisor. At least with the Lottery, the funds 're going to worthy causes, such as the Arts.



Of course, I would never advise complaintant to rely around the Lottery for retirement. But neither would I advise them to depend on Mutual Fund investments. For my dollar, the Lottery is a bit more fun and at least I know I'm gambling. But should you want to retire, look at other investments and help someone who would like to put in the time to assist you retire soon and retire rich. Financial freedom can be obtained to those who are willing to work and understand it, although not likely for those who want to count on such risky investment strategies as Mutual Funds.



Warmest Regards,



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