Investing inside Lottery over Mutual Funds???

Even though I am not a great investment advisor and don't 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 those are wise investments. Why? Among other reasons, they all involve putting money into a great investment vehicle over which they've little control about investment and timing and a lot people end up choosing Mutual Funds as his or her investment within these plans. In fact, putting your money into the Lottery would have been a better investment.



Really? The Lottery as an investment vehicle? Sound crazy? Gamble my retirement funds away inside a government-sponsored game of chance where I have little chance of winning? Where millions of other everyone is putting in profit hopes of winning the top one? Where a lot 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 two ago, I was listening to a financial program about the radio walking on into work. The interviewer was asking the representative of a sizable Mutual Fund in regards to the performance of the Fund. The Rep responded that the Mutual Fund had risen in value by around 20% per year for the prior 2 yrs. But if the interviewer asked about the average return to the common investor within the Fund, the Rep responded the average investor had actually lost 2% annually. Why? Because from the timing of going in and out from the market. Compare this for the Lottery, where everybody knows the exact odds of winning and the exact amount that is won!



But what regarding the great tax benefits of putting my money right into a 401(k) or even an IRA? Yeah, right! Get a tax deduction if you are young and in a relatively low tax bracket so that you can pay taxes for the money you take out when you're retired and in the higher tax bracket? Yeah, which is a good deal. Or, consider the difference in tax rates on capital gains and dividends if you are not in the 401(k) or IRA versus the normal income tax rates for the earnings whenever you pull them from your 401(k) or IRA.



So you are thinking that you can just invest get more info in Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds lead to capital gains taxes if the Fund Managers trade them even when you don't see the amount of money! You have to pay taxes however the Fund may actually have gone down in value! And what about the lost opportunity price of that money that you're now paying in taxes you could have placed into other investments? At least with all the Lottery, you know the actual amount of taxes you could pay if you win and you only have to pay taxes if 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 do i think the a Mutual Fund. You haven't any control over stock market trading and neither does the Fund Manager. The market goes down, so does your Fund. At least you recognize that you are gambling when 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 regarding match the number you put in to the Lottery enjoy it might together with your 401(k). Nobody is lying to you concerning the Lottery being gambling, but those in positions of authority are lying to you about the chances of success in a Mutual Fund!



But surely, you say, you will find there's better probability of making money in a very Mutual Fund than there is inside the Lottery? Hardly. There may be less of a potential for losing all the money you put right into a Mutual Fund than there is losing all of the money you put in the Lottery. But you are never gonna win big in the Mutual Fund. In fact, Mutual Funds are made to minimize your returns by developing a "balanced portfolio." If they could minimize your risk of the market itself, this might be okay. But the problem is that nobody can minimize the risk in the market without sophisticated hedge strategies which are not typically used in Mutual Funds. At least while using 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 occur in Tokyo.



You say you don't like the idea that a lot of of your Lottery gamblings are getting to support government programs? Where do you think the majority of the earnings from 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 all of the risk, you put in all the capital, but most of the earnings in the Mutual Fund go to the Fund manager and your investment advisor. At least while using Lottery, the funds are getting 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 depend on Mutual Fund investments. For my dollar, the Lottery is a lot more fun and at least I know I'm gambling. But should you want to retire, look at other investments and assist someone who is willing to put inside time to assist you retire soon and retire rich. Financial freedom can be obtained to those who will be willing to work and find out about it, but not likely for individuals who want to depend upon such risky investment strategies as Mutual Funds.



Warmest Regards,



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