Investing within the Lottery over Mutual Funds???

Even though I am not a smart investment advisor and not hold myself out together, clients carry on and ask me what to do to get ready 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 pension plan?



Contrary to popular belief, none of such are wise investments. Why? Among other reasons, all of them involve putting money into a good investment vehicle over which they have got little control as to investment and timing and many people turn out choosing Mutual Funds as their investment within efforts. In fact, putting your hard earned money into the Lottery will be a 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 potential for winning? Where millions of other everyone is putting in money in hopes of winning the important one? Where the majority of the money would go to someone else and the chances are strong that I will suffer part or all of my money?



Wait a few minutes - am i talking now about the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little chance of winning. Sounds like 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 hearing a financial program about the radio on my way into work. The interviewer was asking the representative of a sizable Mutual Fund regarding the performance in the Fund. The Rep responded that the Mutual Fund had risen in value by around 20% each year for the prior couple of years. But when the interviewer asked in regards to the average return to the normal investor within the Fund, the Rep responded how the average investor had actually lost 2% each year. Why? Because with the timing of going in and out of the market. Compare this on the Lottery, where everyone should know the exact likelihood of winning as well as the exact amount that is won!



But what concerning the great tax advantages of putting my money right into a 401(k) or perhaps an IRA? Yeah, right! Get a tax deduction when you're young and in the relatively low tax bracket in order to pay taxes around the money you are taking out if you are retired and in a very higher tax bracket? Yeah, that's a good deal. Or, take into account the difference in tax rates on capital gains and dividends should you are not in the 401(k) or IRA versus the normal income tax rates on the earnings if you pull them through your 401(k) or IRA.



So you now are thinking that you need to just put money into Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds result in capital gains taxes when the Fund Managers trade them while you don't see the money! You have to pay taxes although the Fund could possibly have gone down in value! And what regarding the lost opportunity tariff of that money you are now paying in taxes that you could have put into other investments? At least using the Lottery, you know the precise amount of taxes you will probably pay should you win and you also only have to pay taxes in the event you do win.



Yes, you say, though 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, finance institutions and your employer telling you how the Lottery is a good investment. And your employer doesn't go so far as to match the amount you put into the Lottery as it might using your 401(k). Nobody is lying to you regarding the Lottery being gambling, but those involved with positions of authority are lying to you regarding the chances of success in the Mutual Fund!



But surely, you say, there exists a better potential for making money in the Mutual Fund than there is within the Lottery? Hardly. There may be less of a chance of losing all of the money you put in a Mutual Fund than there exists losing most 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 made to minimize your returns by developing a "balanced portfolio." If they could minimize your risk from the market itself, this might be okay. But the problem is the fact that nobody can minimize the risk of the market without sophisticated hedge strategies which aren't typically employed in Mutual Funds. At least with all the Lottery, you have a possibility of winning big. And you can sleep at night, when you aren't wondering if the odds of winning 're going down overnight because 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 almost all of the earnings from the Mutual Fund 're going? No, not to support government programs, but alternatively to support your investment 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 through 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 more info 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 in the event you want to retire, have a look at other investments and assist someone who is willing to put inside the time that will help you retire soon and retire rich. Financial freedom is accessible to those who're willing to work and learn about it, however, not likely for those who want to count on such risky investment strategies as Mutual Funds.



Warmest Regards,



TomArticle Source:

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