Investing within the Lottery over Mutual Funds???

Even though I am not an investment advisor and not hold myself out jointly, clients carry on and 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 monthly pension?



Contrary to popular belief, none of the are wise investments. Why? Among other reasons, each will involve putting money into an investment vehicle over which they have little control as to investment and timing and quite a few people turn out choosing Mutual Funds for their investment within these plans. In fact, putting your money into the Lottery would be a better investment.



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



Wait one minute - 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, exactly what are my chances of retiring on Mutual Fund investments? Not very high, actually.



A few years ago, I was paying attention to a financial program around the radio going into work. The interviewer was asking the representative of a substantial Mutual Fund about the performance in the Fund. The Rep responded the Mutual Fund had risen in value by typically 20% each year for the prior couple of years. But once the interviewer asked in regards to the average return to the average investor within the Fund, the Rep responded the average investor had actually lost 2% annually. Why? Because with the timing of opting and out from the market. Compare this for the Lottery, where everyone understands the exact probability of winning along with the exact amount that may be won!



But what about the great tax attributes of putting my money in to a 401(k) or perhaps an IRA? Yeah, right! Get a tax deduction when you find yourself young and in a very relatively low tax bracket to help you pay taxes around the money you adopt out when you are retired and in the higher tax bracket? Yeah, that's a good deal. Or, look at the difference in tax rates on capital gains and dividends if you are not in the 401(k) or IRA versus the normal income tax rates on the earnings once you pull them out of your 401(k) or IRA.



So you now are thinking that you should just purchase 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 though you don't see the cash! You have to pay taxes even though the Fund may actually have gone down in value! And what regarding the lost opportunity price of that money that you will be now paying in taxes that you might have put into other investments? At least with the Lottery, you know the complete amount of taxes you can expect to pay if you win and you only have to pay taxes should you do win.



Yes, you say, nevertheless the Lottery is gambling and I have no control over whether I win or lose. You are right. The Lottery is gambling. But same goes with a Mutual Fund. You have no control over the stock exchange and neither does the Fund Manager. The market decreases, does your Fund. At least you recognize you are gambling if you play the Lottery. You don't have the government, banking institutions and your employer telling you how the Lottery is a great investment. And your employer doesn't go so far as to match the number you put in to the Lottery want 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 about the chances of success in a very Mutual Fund!



But surely, you say, there's a better possibility of making money inside a Mutual Fund than there is within the Lottery? Hardly. There may be less of a possibility of losing all the money you put right into a Mutual Fund than there's losing all 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 designed to minimize your returns by setting up 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 from the market without sophisticated hedge strategies that aren't typically used in Mutual Funds. At least using the Lottery, you have a potential for winning big. And you can sleep in the evening, when you aren't wondering if the odds of winning 're going down overnight as a result of something that happens in Tokyo.



You say you don't like the idea that a lot of of your Lottery gamblings are inclined to support government programs? Where do you think most of the earnings from your Mutual Fund are getting? No, not to support government programs, but alternatively to support neglect the advisor's and also the Mutual Fund manager's retirement? You take every one of the risk, you add in most of the capital, but a lot of the earnings through the Mutual Fund go towards the Fund manager and your investment advisor. here At least while using Lottery, the funds 're going to worthy causes, like the Arts.



Of course, I would never advise complaintant to rely for the Lottery for his or her retirement. But neither would I advise them to rely 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, examine other investments and help someone who will to put in the time that may help you retire soon and retire rich. Financial freedom can be acquired to those who're willing to work and discover it, although not likely for those who want to count on such risky investment strategies as Mutual Funds.



Warmest Regards,



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