Investing within the Lottery over Mutual Funds???

Even though I am not an investment advisor and don't hold myself out as one, clients continue to 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 inside my profit sharing plan or monthly pension?



Contrary to popular belief, none of these are wise investments. Why? Among other reasons, each will involve putting money into a great investment vehicle over which they have little control concerning investment and timing and many people turn out choosing Mutual Funds his or her investment within efforts. In fact, putting your cash into the Lottery will 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 people are putting in cash in hopes of winning the top one? Where the majority of the money visits someone else and also the chances are strong that I will suffer part or all of my money?



Wait a moment - am i talking now in regards to the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little possibility of winning. Sounds like similar to Mutual Fund investment in a very 401(k) or IRA. After all, what exactly are my probability of retiring on Mutual Fund investments? Not very high, actually.



A few years ago, I was hearing a financial program about the radio walking on into work. The interviewer was asking the representative of a large Mutual Fund about the performance from the Fund. The Rep responded that the Mutual Fund had risen in value by about 20% each year for the prior couple of years. But if the interviewer asked in regards to the average return to the normal investor inside Fund, the Rep responded that this average investor had actually lost 2% a year. Why? Because of the timing of opting and out with the market. Compare this on the Lottery, where everyone understands the exact chances of winning and the exact amount that might be won!



But what regarding the great tax features of putting my money right into a 401(k) or an IRA? Yeah, right! Get a tax deduction when you are young and in a very relatively low tax bracket so that you can pay taxes around the money you take out when you find yourself retired and in the higher tax bracket? Yeah, this is a good deal. Or, consider the difference in tax rates on capital gains and dividends in case you are not inside a 401(k) or IRA versus the ordinary income tax rates for the earnings once you pull them out of your 401(k) or IRA.



So congratulations, you are thinking that you need to just purchase Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds cause capital gains taxes if the Fund Managers trade them while you don't see the bucks! You have to pay taxes although Fund may actually have gone down in value! And what regarding the lost opportunity cost 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 should you win so you only get more info 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 have zero 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 whenever you play the Lottery. You don't have government entities, finance institutions and your employer telling you that the Lottery is an excellent investment. And your employer doesn't go so far as to match the total amount you put into the Lottery want it might with your 401(k). Nobody is lying to you about the Lottery being gambling, but those in positions of authority are lying to you regarding the chances of success in the Mutual Fund!



But surely, you say, there's a better probability of making money in a very Mutual Fund than there is in the Lottery? Hardly. There may be less of a potential for losing all the money you put in a Mutual Fund than there's losing all of the money you put in the Lottery. But you are never going to win big inside a Mutual Fund. In fact, Mutual Funds are built 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 the fact that nobody can minimize the risk in the market without sophisticated hedge strategies which aren't typically used in Mutual Funds. At least with all the Lottery, you have a probability of winning big. And you can sleep at night, when you aren't wondering if the likelihood of winning are going down overnight because of something that occurs 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 a lot of the earnings from the Mutual Fund are inclined? No, to not support government programs, but alternatively to support neglect the advisor's and the Mutual Fund manager's retirement? You take every one of the risk, you put in all the capital, but a lot of the earnings through the Mutual Fund go on the Fund manager and your investment advisor. At least using the Lottery, the funds 're going to worthy causes, including the Arts.



Of course, I would never advise litigant to rely for the Lottery because of their retirement. But neither would I advise them to depend upon Mutual Fund investments. For my dollar, the Lottery is a lot more fun and at least I know I'm gambling. But if you want to retire, look at other investments and use someone who would like to put inside the time to assist you retire soon and retire rich. Financial freedom is accessible to those who will be willing to work and learn about it, but not likely for those who want to rely on such risky investment strategies as Mutual Funds.



Warmest Regards,



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