Investing in the Lottery over Mutual Funds???

Even though I am not a good investment advisor rather than hold myself out together, clients still 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 within my profit sharing plan or monthly pension?

Contrary to popular belief, none of such are wise investments. Why? Among other reasons, each will 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 his or her investment within diets. In fact, putting your cash into the Lottery will be a better investment.

Really? The Lottery as a great investment vehicle? Sound crazy? Gamble my retirement funds away in the government-sponsored game of chance where I have little chance of winning? Where millions of other people are putting in money in hopes of winning the big one? Where most of the money travels to someone else and also the chances are strong that I will miss part or most of my money?

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

A few years ago, I was listening to a financial program on the radio going into work. The interviewer was asking the representative of a sizable Mutual Fund concerning the performance of the Fund. The Rep responded that the Mutual Fund had risen in value by an average of 20% per year for the prior a couple of years. But once the interviewer asked regarding the average return to the common investor in the Fund, the Rep responded that this average investor had actually lost 2% a year. Why? Because in the timing of planning and out with the market. Compare this on the Lottery, where everyone understands the exact chances of winning along with the exact amount that might be won!

But what in regards to the great tax features of putting my money into a 401(k) or an IRA? Yeah, right! Get a tax deduction if you are young and in a very relatively low tax bracket to help you pay taxes about the money you adopt out when you're retired and in a very higher tax bracket? Yeah, what a good deal. Or, think about the difference in tax rates on capital gains and dividends in the event you are not in a very 401(k) or IRA versus the ordinary income tax rates on the earnings when you pull them through your 401(k) or IRA.

So now you are thinking that you can just purchase Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds bring about capital gains taxes if the Fund Managers trade them even though you don't see the money! You have to pay taxes even though the Fund could actually have gone down in value! And what concerning the lost opportunity price of that money that you will be now paying in taxes that one could have placed into other investments? At least with the Lottery, you know the exact amount of taxes you could pay should you win and you also only have to pay taxes if you do win.

Yes, you say, though the Lottery is gambling and I haven't any control over whether I win or lose. You are right. The Lottery is gambling. But do i think the a Mutual Fund. You don't have 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're gambling if you play the Lottery. You don't have the us government, loan companies and your employer telling you website that the Lottery is a good investment. And your employer doesn't go so far as to match the number you put in the Lottery like it might with your 401(k). Nobody is lying to you in regards to the Lottery being gambling, but those who work in positions of authority are lying to you about the chances of success inside a Mutual Fund!

But surely, you say, there exists a better possibility of making money in a Mutual Fund than there is in the Lottery? Hardly. There may be less of a potential for losing every one of the money you put in to a Mutual Fund than there is certainly losing all of the money you put to the Lottery. But you are never likely to win big in the Mutual Fund. In fact, Mutual Funds are made to minimize your returns by creating a "balanced portfolio." If they could minimize your risk with the market itself, this might be okay. But the problem is that nobody can minimize the risk with the market without sophisticated hedge strategies which are not typically employed in Mutual Funds. At least with the Lottery, you have a probability of winning big. And you can sleep through the night, when you aren't wondering if the chances of winning are getting down overnight as a consequence of something that happens in Tokyo.

You say you never like the idea that most of your Lottery gamblings are inclined to support government programs? Where do you think the majority of the earnings out of your Mutual Fund 're going? No, not to support government programs, but to support neglect the advisor's and the Mutual Fund manager's retirement? You take most of the risk, you place in every one of the capital, but almost all of the earnings through the Mutual Fund go for the Fund manager as well as your investment advisor. At least using the Lottery, the funds are going to worthy causes, for example the Arts.

Of course, I would never advise a client to rely about the Lottery for his or her retirement. But neither would I advise them to depend upon Mutual Fund investments. For my dollar, the Lottery is more fun and at least I know I'm gambling. But in the event you want to retire, examine other investments and assist someone who will to put inside time to assist 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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