Investing inside Lottery over Mutual Funds???

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



Contrary to popular belief, none of such are wise investments. Why? Among other reasons, all of them involve putting money into a smart investment vehicle over which they have got little control as to investment and timing and a lot people end up choosing Mutual Funds as his or her investment within efforts. In fact, putting your hard earned money into the Lottery would be a better investment.



Really? The Lottery as a smart 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 take advantage hopes of winning the top one? Where a lot of the money visits someone else along with the chances are strong that I will lose part or all my money?



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



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



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



So you now are thinking that you ought to just purchase Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds lead to capital gains taxes when the Fund Managers trade them even if you don't see the cash! You have to pay taxes even though the Fund may actually have gone down in value! And what in regards to the lost opportunity price of that money you are now paying in taxes you could have put into other investments? At least with all the Lottery, you know the precise amount of taxes you could pay in the event you win and you only have to pay taxes in the event you do win.



Yes, you say, but the Lottery is gambling and I haven't any control over whether I win or lose. You are right. The Lottery is gambling. But so is a Mutual Fund. You haven't any control over the stock exchange and neither does the Fund Manager. The market fails, so does your Fund. At least you recognize you are gambling when you play the Lottery. You don't have the us government, finance institutions and your employer telling you the Lottery is a great investment. And your employer doesn't go so far regarding match the total amount you put in to the Lottery want 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 regarding the chances of success check here in a Mutual Fund!



But surely, you say, there is a better chance of making money in the Mutual Fund than there is inside the Lottery? Hardly. There may be less of a probability of losing every one of the money you put into 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 inside a Mutual Fund. In fact, Mutual Funds are built to minimize your returns by setting up a "balanced portfolio." If they could minimize your risk of the market itself, this might be okay. But the problem is the fact that nobody can minimize the risk from the market without sophisticated hedge strategies which are not typically found in Mutual Funds. At least with all the Lottery, you have a possibility of winning big. And you can sleep during the night, because you aren't wondering if the probability of winning are inclined down overnight as a result of something that occurs in Tokyo.



You say you never like the idea that a majority of of your Lottery gamblings are inclined 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 instead to support your investment advisor's and the Mutual Fund manager's retirement? You take all of the risk, you set in most of the capital, but a lot of the earnings from your Mutual Fund go towards the Fund manager along with your investment advisor. At least with all the Lottery, the funds are inclined to worthy causes, for example the Arts.



Of course, I would never advise litigant to rely around the Lottery for their 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 in case you want to retire, examine other investments and use someone who is willing to put inside the time that will help you retire soon and retire rich. Financial freedom can be obtained to those who are willing to work and discover it, however, not likely for individuals who want to depend upon such risky investment strategies as Mutual Funds.



Warmest Regards,



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