Investing inside Lottery over Mutual Funds???

Even though I am not a great investment advisor and never 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 the are wise investments. Why? Among other reasons, they all involve putting money into a great investment vehicle over which they've little control regarding investment and timing and many people find yourself choosing Mutual Funds as their investment within these plans. In fact, putting your dollars into the Lottery would have been a better investment.



Really? The Lottery as a good investment vehicle? Sound crazy? Gamble my retirement funds away in a very 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 big one? Where almost all of the money would go to someone else along with the chances are strong that I will forfeit part or every one of my money?



Wait one minute - shall we be held talking now concerning the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little chance of winning. Sounds like 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 hearing a financial program for the radio going into work. The interviewer was asking the representative of a substantial Mutual Fund about the performance with the Fund. The Rep responded that the Mutual Fund had risen in value by typically 20% a year for the prior 2 yrs. But if the interviewer asked about the average return to the common investor inside 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 knows the exact likelihood of winning along with the exact amount that could be won!



But what concerning the great tax features of putting my money in to a 401(k) or even an IRA? Yeah, right! Get a tax deduction when you are young and inside a relatively low tax bracket so that you can pay taxes for the money you are taking out if you are retired and in a very higher tax bracket? Yeah, that's a good deal. Or, think about the difference in tax rates on capital gains and dividends in the event you are not in the 401(k) or IRA versus the normal income tax rates on the earnings whenever you pull them from the 401(k) or IRA.



So congratulations, you are thinking that you should just invest 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 if you don't see the bucks! You have to pay taxes even though the Fund might actually have gone down in value! And what regarding the lost opportunity cost of that check here money that you're 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 in case you win so you only have to pay taxes if you do win.



Yes, you say, but the Lottery is gambling and I have no control over whether I win or lose. You are right. The Lottery is gambling. But same with a Mutual Fund. You don't have any control over the stock exchange and neither does the Fund Manager. The market falls, the same is true your Fund. At least you recognize that you're gambling whenever you play the Lottery. You don't have the us government, finance institutions and your employer telling you how the Lottery is an excellent investment. And your employer doesn't go so far concerning match the sum you put to 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 about the chances of success in a very 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 most of the money you put right into a Mutual Fund than there's losing all the money you put into the Lottery. But you are never going to win big in a very Mutual Fund. In fact, Mutual Funds are built to minimize your returns by making a "balanced portfolio." If they could minimize your risk from the market itself, this might be okay. But the problem is the fact that nobody can minimize the risk from the market without sophisticated hedge strategies that are not typically employed in Mutual Funds. At least while using Lottery, you have a potential for winning big. And you can sleep during the night, since you aren't wondering if the chances of winning 're going down overnight because of something that happens in Tokyo.



You say that you do not like the idea that a lot of of your Lottery gamblings 're going to support government programs? Where do you think most of the earnings from a Mutual Fund are getting? No, to not support government programs, but rather 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 a lot of the earnings in the Mutual Fund go on the Fund manager along with your investment advisor. At least using the Lottery, the funds are going to worthy causes, including the Arts.



Of course, I would never advise a customer to rely on 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 in case you want to retire, take a look at other investments and assist someone who would like to put inside time to assist you retire soon and retire rich. Financial freedom is available to those who will be willing to work and find out about it, but not likely for many who want to rely on such risky investment strategies as Mutual Funds.



Warmest Regards,



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