Investing within the Lottery over Mutual Funds???

Even though I am not a good investment advisor and don't hold myself out as you, clients continue to ask me what to do to plan retirement. Should I max out my 401(k) contribution? Should I do an IRA? Should I put more within my profit sharing plan or type of pension?



Contrary to popular belief, none of those are wise investments. Why? Among other reasons, each will involve putting money into a great investment vehicle over which they've little control as to investment and timing and quite a few people wind up choosing Mutual Funds his or her investment within these plans. In fact, putting your money into the Lottery would be a better investment.



Really? The Lottery as a smart investment vehicle? Sound crazy? Gamble my retirement funds away in the government-sponsored game of chance where I have little possibility of winning? Where millions of other people are putting in cash in hopes of winning the big one? Where the majority of the money goes to someone else as well as the chances are strong that I will lose part or all of my money?



Wait a few minutes - shall we be held talking now concerning the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little potential for winning. Sounds like similar to Mutual Fund investment in 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 so ago, I was hearing a financial program for the radio on my way into work. The interviewer was asking the representative of a big Mutual Fund about the performance with the Fund. The Rep responded that this Mutual Fund had risen in value by typically 20% a year for the prior two years. But if the interviewer asked regarding the average return to the typical investor inside Fund, the Rep responded that the average investor had actually lost 2% each year. Why? Because from the timing of opting and out from the market. Compare this for the Lottery, where everyone knows the exact odds of winning and the exact amount that may be won!



But what in regards to the great tax benefits of putting my money into a 401(k) or perhaps an IRA? Yeah, right! Get a tax deduction when you find yourself young and inside a relatively low tax bracket so that you can pay taxes for the money you are taking out when you are retired and in the higher tax bracket? Yeah, that's a good deal. Or, look at the difference in tax rates on capital gains and dividends should you are not in the 401(k) or IRA versus the normal income tax rates for the earnings whenever you pull them through your 401(k) or IRA.



So now you are thinking that you ought to just spend money on 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 cash! You have to pay taxes although Fund might actually have gone down in value! And what regarding the lost opportunity tariff of that money that you are now paying in taxes that you could have put in other investments? At least using the Lottery, you know the actual amount of taxes you will pay in the event you win so you only have to pay taxes in case 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 so is a Mutual Fund. You have no control over stock market trading and neither does the Fund Manager. The market goes down, does your Fund. At least you recognize that you will be gambling whenever you play the Lottery. You don't have the us government, loan companies and your employer telling you that 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 who work in positions of authority are lying to you regarding the chances of success in a very Mutual Fund!



But surely, you say, there exists a better possibility of making money in a Mutual Fund than there is inside Lottery? Hardly. There may be less of a probability of losing most of the money you put in a Mutual Fund than there is certainly losing most of the money you put in to the Lottery. But you are never likely to win big inside a Mutual Fund. In fact, Mutual Funds are meant to minimize your returns by setting up a "balanced portfolio." If they could minimize your risk of the market itself, this might be okay. But the problem is nobody can minimize the risk of the market without sophisticated hedge strategies that aren't typically utilized in Mutual Funds. At least with all the Lottery, you have a potential for winning big. And you can sleep in the evening, because you aren't wondering if the chances of winning are inclined down overnight as a result of something that occurs in Tokyo.



You say you never like the idea that a majority 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 inclined? No, not to support government programs, but to support neglect the advisor's and also the Mutual Fund manager's retirement? You take all of the risk, you add in all the capital, but most of the earnings through the Mutual Fund go towards the website Fund manager and your investment advisor. At least while using Lottery, the funds 're going to worthy causes, such as the Arts.



Of course, I would never advise complaintant to rely around the Lottery for their retirement. But neither would I advise them to count 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, examine other investments and work with someone who would prefer to put within the time that may help you retire soon and retire rich. Financial freedom is available to those that are willing to work and learn about it, however, not likely for individuals who want to rely on such risky investment strategies as Mutual Funds.



Warmest Regards,



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