Investing in the Lottery over Mutual Funds???

Even though I am not a good investment advisor and don't 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 within my profit sharing plan or monthly pension?

Contrary to popular belief, none of those are wise investments. Why? Among other reasons, all of them involve putting money into a smart investment vehicle over which they've little control concerning investment and timing and most people turn out choosing Mutual Funds for their investment within these plans. In fact, putting your money into the Lottery will be a better investment.

Really? The Lottery as a good investment vehicle? Sound crazy? Gamble my retirement funds away inside a government-sponsored game of chance where I have little possibility of winning? Where millions of other people are putting in take advantage hopes of winning the big one? Where a lot of the money would go to someone else and also the chances are strong that I will forfeit part or all of my money?

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

A year or two ago, I was hearing a financial program on the radio walking on into work. The interviewer was asking the representative of a big Mutual Fund about the performance in the Fund. The Rep responded how the Mutual Fund had risen in value by an average of 20% a year for the prior two years. But once the interviewer asked concerning the average return to the average investor inside the Fund, the Rep responded that the average investor had actually lost 2% annually. Why? Because in the timing of going in and out from the market. Compare this for the Lottery, where everyone understands the exact chances of winning and also the exact amount that is won!

But what concerning the great tax attributes of putting my money in to a 401(k) or even 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 take out when you're retired and inside a higher tax bracket? Yeah, this is a good deal. Or, take into account the difference in tax rates on capital gains and dividends if you are not inside a 401(k) or IRA versus the standard income tax rates around the earnings once you pull them through your 401(k) or IRA.

So you now are thinking that you need to just invest in 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 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 that you are now paying in taxes you could have put in other investments? At least with all the Lottery, you know the actual amount of taxes you could pay if you win and also you only have to pay taxes should you do win.

Yes, you say, nevertheless the Lottery is gambling and I haven't any control over whether I win or lose. You are right. The Lottery is gambling. But same with a Mutual Fund. You haven't any control over the stock market and neither does the Fund Manager. The market fails, so does your Fund. At least you recognize that you will be gambling once you play the Lottery. You don't have the government, financial institutions and your employer telling you the Lottery is a great investment. And your employer doesn't go so far about match the number you put into the Lottery like it might with your 401(k). Nobody is lying to you about the Lottery being gambling, but those who work in positions of authority are lying to you regarding the chances of success in the Mutual Fund!

But surely, you say, there is a better probability of making money inside a Mutual Fund than there is inside Lottery? Hardly. There may be less of a probability of losing all of the money you put in a Mutual Fund than there's losing all the money you put in the Lottery. But you are never going here 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 with the market itself, this might be okay. But the problem is nobody can minimize the risk of the market without sophisticated hedge strategies which are not typically employed in Mutual Funds. At least using the Lottery, you have a potential for winning big. And you can sleep through the night, because you aren't wondering if the likelihood of winning are getting down overnight as a result of something that occurs in Tokyo.

You say you do not like the idea that most of your Lottery gamblings are inclined 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 and the Mutual Fund manager's retirement? You take every one of the risk, you place in all of the capital, but almost all of the earnings from your Mutual Fund go to the Fund manager plus 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 litigant to rely on the Lottery because of 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 should you want to retire, look at other investments and assist someone who would like to put inside time that will help you retire soon and retire rich. Financial freedom is available to those that are willing to work and find out about it, and not likely for individuals who want to rely on such risky investment strategies as Mutual Funds.

Warmest Regards,

TomArticle Source:

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