Investing inside Lottery over Mutual Funds???

Even though I am not a great investment advisor and never hold myself out as you, clients still ask me what to do to prepare for retirement. Should I max out my 401(k) contribution? Should I do an IRA? Should I put more inside my profit sharing plan or type of pension?



Contrary to popular belief, none of these are wise investments. Why? Among other reasons, each will involve putting money into a good investment vehicle over which they have little control concerning investment and timing and many people turn out choosing Mutual Funds his or her investment within diets. In fact, putting your hard earned money into the Lottery would be a better investment.



Really? The Lottery as a great investment vehicle? Sound crazy? Gamble my retirement funds away inside a government-sponsored game of chance where I have little probability of winning? Where millions of other individuals are putting in take advantage hopes of winning the large one? Where a lot of the money would go to someone else and the chances are strong that I will miss part or all of my money?



Wait a moment - are we talking now regarding the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little possibility of winning. Sounds like as being similar to Mutual Fund investment inside a 401(k) or IRA. After all, precisely what are my likelihood of retiring on Mutual Fund investments? Not very high, actually.



A year or so ago, I was playing a financial program about the radio walking on into work. The interviewer was asking the representative of a big Mutual Fund about the performance with the Fund. The Rep responded that the Mutual Fund had risen in value by typically 20% a year for the prior 2 yrs. But if the interviewer asked about the average return to the typical investor inside the Fund, the Rep responded that the average investor had actually lost 2% each year. Why? Because with the timing of opting and out of the market. Compare this for the Lottery, where everyone knows the exact likelihood of winning as well as the exact amount that is won!



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



So now you are thinking that you ought to just spend money on Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds bring about capital gains taxes in the event the Fund Managers trade them even when you don't see the amount of money! You have to pay taxes however the Fund could actually have gone down in value! And what in regards to the lost opportunity expense of that money you are now paying in taxes that you could have put into other investments? At least with the Lottery, you know the actual amount of get more info taxes you will pay in case you win and you only have to pay taxes in case you do win.



Yes, you say, but the Lottery is gambling and I have no control over whether I win or lose. You are right. The Lottery is gambling. But so is a Mutual Fund. You have no control over the stock market and neither does the Fund Manager. The market falls, so does your Fund. At least you recognize that you're gambling whenever you play the Lottery. You don't have the federal government, financial institutions 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 into the Lottery want it might with your 401(k). Nobody is lying to you regarding the Lottery being gambling, but those involved with positions of authority are lying to you concerning the chances of success in a very Mutual Fund!



But surely, you say, there's a better possibility of making money in a Mutual Fund than there is in the Lottery? Hardly. There may be less of a chance of losing all of the money you put into a Mutual Fund than there is certainly losing all of the money you put in to the Lottery. But you are never going to win big in a Mutual Fund. In fact, Mutual Funds are meant 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 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, because you aren't wondering if the probability of winning are inclined down overnight as a result of something that occur in Tokyo.



You say you don't like the idea that a majority of of your Lottery gamblings are getting to support government programs? Where do you think the majority of the earnings from your Mutual Fund are inclined? No, never to support government programs, but rather to support neglect the advisor's as well as the Mutual Fund manager's retirement? You take all the risk, you set in most of the capital, but the majority of the earnings from the Mutual Fund go for the Fund manager as well as your investment advisor. At least with the Lottery, the funds are getting to worthy causes, like the Arts.



Of course, I would never advise a client to rely about the Lottery for his or her retirement. But neither would I advise them to depend upon Mutual Fund investments. For my dollar, the Lottery is more fun and at least I know I'm gambling. But if you want to retire, have a look at other investments and use someone who will to put inside the time to help you retire soon and retire rich. Financial freedom is accessible to those who're willing to work and discover it, although not likely in case you want to count on such risky investment strategies as Mutual Funds.



Warmest Regards,



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