Investing within the Lottery over Mutual Funds???

Even though I am not a great investment advisor rather than hold myself out jointly, clients always 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 monthly pension?



Contrary to popular belief, none of the are wise investments. Why? Among other reasons, they all involve putting money into a smart investment vehicle over which they've got little control as to investment and timing and quite a few people wind up choosing Mutual Funds as their investment within diets. 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 probability of winning? Where millions of other folks are putting in money in hopes of winning the important one? Where the majority of the money travels to someone else and also the chances are strong that I will suffer part or all my money?



Wait a few minutes - shall we be 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 hearing a financial program for the radio on my way into work. The interviewer was asking the representative of a big Mutual Fund in regards to the performance of the Fund. The Rep responded how the Mutual Fund had risen in value by an average of 20% annually for the prior couple of years. But once the interviewer asked in regards to the average return to the average investor inside the Fund, the Rep responded that this average investor had actually lost 2% each year. Why? Because with the timing of going in and out from the market. Compare this to the Lottery, where everyone should know the exact chances of winning along with the exact amount that may be won!



But what about the great tax features of putting my money into a 401(k) or perhaps an IRA? Yeah, right! Get a tax deduction when you are young and in the relatively low tax bracket to help you pay taxes around the money you're taking out if you are retired and inside a higher tax bracket? Yeah, which is a good deal. Or, consider 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 when you pull them through your 401(k) or IRA.



So you are thinking that you can just invest in 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 while you don't see the amount of money! You have to pay taxes although Fund might actually have gone down in value! And what concerning the lost opportunity price of that money that you're now paying in taxes you could have put in other investments? At least using the Lottery, you get more info know the precise amount of taxes you will pay in the event you win and you also only have to pay taxes in case you do win.



Yes, you say, however 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 so is a Mutual Fund. You have zero control over stock market trading and neither does the Fund Manager. The market decreases, does your Fund. At least you recognize that you will be gambling if you play the Lottery. You don't have the government, banking institutions and your employer telling you the Lottery is a great investment. And your employer doesn't go so far concerning match the sum you put in 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 a very Mutual Fund!



But surely, you say, you will find there's better probability of making money in the Mutual Fund than there is inside the Lottery? Hardly. There may be less of a potential for losing most of the money you put right into a Mutual Fund than there's losing all the money you put into the Lottery. But you are never going to win big in a very Mutual Fund. In fact, Mutual Funds are meant to minimize your returns by making a "balanced portfolio." If they could minimize your risk with 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 that are not typically employed in Mutual Funds. At least using 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 getting 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 a lot of the earnings out of your Mutual Fund are going? No, to never support government programs, but alternatively to support your investment advisor's along with the Mutual Fund manager's retirement? You take most of the risk, you place in all of the capital, but almost all of the earnings from your Mutual Fund go towards the Fund manager and your investment advisor. At least with all the Lottery, the funds 're going to worthy causes, such as the Arts.



Of course, I would never advise complaintant to rely around the Lottery because of their retirement. But neither would I advise them to count on Mutual Fund investments. For my dollar, the Lottery is much more fun and at least I know I'm gambling. But in case you want to retire, examine other investments and work with someone who will to put within the time to help you retire soon and retire rich. Financial freedom can be acquired to those who will be willing to work and find out about it, although not likely for those who want to count on such risky investment strategies as Mutual Funds.



Warmest Regards,



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