Investing inside the Lottery over Mutual Funds???

Even though I am not an investment advisor and not hold myself out together, clients carry on and 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 inside my profit sharing plan or type of pension?



Contrary to popular belief, none of these are wise investments. Why? Among other reasons, each will involve putting money into a smart investment vehicle over which they have little control regarding investment and timing and most people turn out choosing Mutual Funds his or her investment within efforts. In fact, putting your money into the Lottery would be a better investment.



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



Wait a moment - are we talking now regarding 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 inside a 401(k) or IRA. After all, what are my probability of retiring on Mutual Fund investments? Not very high, actually.



A few years ago, I was paying attention to a financial program for the radio going into work. The interviewer was asking the representative of a sizable Mutual Fund concerning the performance in the Fund. The Rep responded the Mutual Fund had risen in value by about 20% each year for the prior couple of years. But when the interviewer asked in regards to the average return to the normal investor within the Fund, the Rep responded how the average investor had actually lost 2% a year. Why? Because from the timing of planning and out in the market. Compare this to the Lottery, where everyone understands the exact chances of winning along with the exact amount that could be won!



But what concerning the great tax features of putting my money into a 401(k) or perhaps 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 take out when you're retired and in a higher tax bracket? Yeah, that's a good deal. Or, consider the difference in tax rates on capital gains and dividends should you are not in a very 401(k) or IRA versus the ordinary income tax rates around the earnings whenever you pull them from the 401(k) or IRA.



So congratulations, you are thinking that you should 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 if you don't see the money! You have to pay taxes even though the Fund may actually have gone down in value! And what concerning the lost opportunity expense of that money that you will be now paying in taxes that you might have put into other investments? At least with the Lottery, you know the precise amount of taxes you will probably pay in the event you win and you also only have to pay taxes in the event you do win.



Yes, you say, nevertheless the Lottery is gambling and I have no control over whether I win or lose. You are right. The Lottery is gambling. But so is a Mutual Fund. You don't have any control over trading stocks and neither does the Fund Manager. The market decreases, does your Fund. At least you recognize you are gambling if you play the Lottery. You don't have the government, banking institutions and your employer telling you the Lottery is a good investment. And your employer doesn't go so far concerning match the amount you put in the Lottery enjoy it might with your 401(k). Nobody is lying to you regarding the Lottery being gambling, but those involved with positions of authority are lying to you about the chances of success in a very Mutual Fund!



But surely, you say, there's a better possibility of making money in a Mutual Fund than there is inside the Lottery? Hardly. There may be less of a probability of losing most of the money you put into a Mutual Fund than there is certainly losing all of the money you put in the Lottery. But you are never gonna win big in 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 utilized in Mutual Funds. At least with the Lottery, you have a potential for winning big. And you can sleep during the night, since you aren't wondering if the likelihood of winning are going down overnight as a result of something that is situated Tokyo.



You say you never like the idea that a majority of of your Lottery gamblings are inclined to support government programs? Where do you think a lot of the earnings from your Mutual Fund are inclined? No, never to support government programs, but alternatively to support ignore the advisor's as well as the Mutual Fund manager's retirement? You take all the risk, you put in every one of the capital, but almost all of the earnings in the Mutual Fund go towards the Fund manager as well as your investment advisor. At least with all the Lottery, the funds 're going to worthy causes, for example the Arts.



Of course, I would never advise complaintant to rely for the Lottery because of their retirement. But neither would I advise them to rely 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, look at other investments and assist someone who will to put in the time to assist you retire soon and retire rich. Financial freedom can be obtained to those who will be willing to work and understand it, and not likely for individuals who want to rely on such risky check here investment strategies as Mutual Funds.



Warmest Regards,



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