Investing within the Lottery over Mutual Funds???

Even though I am not a good investment advisor and never hold myself out jointly, clients continue to 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 within 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 smart investment vehicle over which they've little control concerning investment and timing and many people turn out choosing Mutual Funds for their investment within these plans. In fact, putting your hard earned money into the Lottery has to be better investment.



Really? The Lottery as an investment vehicle? Sound crazy? Gamble my retirement funds away in a government-sponsored game of chance where I have little possibility of winning? Where millions of other everyone is putting in take advantage hopes of winning the large one? Where almost all of the money would go to someone else along with the chances are strong that I will miss part or every one of my money?



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



A few years ago, I was listening to a financial program for the radio going into work. The interviewer was asking the representative of a big Mutual Fund regarding the performance in the Fund. The Rep responded that this Mutual Fund had risen in value by typically 20% each year for the prior a couple of years. But once the interviewer asked concerning the average return to the common investor in the Fund, the Rep responded how the average investor had actually lost 2% each year. Why? Because from the timing of opting and out in the market. Compare this to the Lottery, where everybody knows the exact odds of winning and also the exact amount that may be won!



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



So you are thinking that you need to just spend money on 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 even though you don't see the amount of money! You have to pay taxes although Fund could actually have gone down in value! And what concerning the lost opportunity cost of that money that you are now paying in taxes that you could have placed into other investments? At least with all the Lottery, you know the exact amount of taxes you can expect to pay if you win so you only have to pay taxes should you do win.



Yes, you say, but 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 with a Mutual Fund. You haven't any control over the stock exchange 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, banking institutions and your employer telling you how the Lottery is a great investment. And your employer doesn't go so far regarding match the total amount you put to the Lottery want it here might using your 401(k). Nobody is lying to you about the Lottery being gambling, but those who work in positions of authority are lying to you concerning the chances of success in a Mutual Fund!



But surely, you say, there's a better potential for making money inside a Mutual Fund than there is inside the Lottery? Hardly. There may be less of a chance of losing most of the money you put in a Mutual Fund than there's losing every one of the money you put into the Lottery. But you are never likely to win big in a very Mutual Fund. In fact, Mutual Funds are designed to minimize your returns by making a "balanced portfolio." If they could minimize your risk in the market itself, this might be okay. But the problem is always that nobody can minimize the risk of the market without sophisticated hedge strategies which aren't typically found in Mutual Funds. At least with the Lottery, you have a potential for winning big. And you can sleep during the night, as you aren't wondering if the chances of winning are getting down overnight as a consequence of something that occur in Tokyo.



You say that you do not like the idea that a lot of of your Lottery gamblings are inclined to support government programs? Where do you think the majority of the earnings from your Mutual Fund are going? No, to never support government programs, but instead to support ignore the advisor's as well as the Mutual Fund manager's retirement? You take most of the risk, you place in every one of the capital, but a lot of the earnings from the Mutual Fund go for the Fund manager as well as your investment advisor. At least using the Lottery, the funds are inclined to worthy causes, including the Arts.



Of course, I would never advise a customer to rely around the Lottery for retirement. But neither would I advise them to depend upon Mutual Fund investments. For my dollar, the Lottery is a bit more fun and at least I know I'm gambling. But in the event you want to retire, take a look at other investments and assist someone who would prefer to put inside time to assist you retire soon and retire rich. Financial freedom is accessible to those who will be willing to work and understand it, however, not likely in case you want to rely on such risky investment strategies as Mutual Funds.



Warmest Regards,



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