Investing inside Lottery over Mutual Funds???

Even though I am not a good investment advisor rather than hold myself out as you, 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 have little control as to investment and timing and quite a few people wind up choosing Mutual Funds as their investment within efforts. In fact, putting your hard earned money into the Lottery would be a better investment.



Really? The Lottery as a smart investment vehicle? Sound crazy? Gamble my retirement funds away inside a government-sponsored game of chance where I have little potential for winning? Where millions of other folks are putting in profit hopes of winning the big one? Where most of the money visits 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 chance of winning. Sounds like a lot like Mutual Fund investment in a very 401(k) or IRA. After all, exactly what are my chances of retiring on Mutual Fund investments? Not very high, actually.



A few years ago, I was playing a financial program around the radio walking on into work. The interviewer was asking the representative of a large Mutual Fund about the performance of the Fund. The Rep responded that this Mutual Fund had risen in value by typically 20% a year for the prior two years. But once the interviewer asked in regards to the average return to the typical investor in the Fund, the Rep responded that this average investor had actually lost 2% each year. Why? Because of the timing of planning and out with the market. Compare this for the Lottery, where everyone should know the exact chances of winning and the exact amount that is won!



But what concerning the great tax benefits of putting my money in to a 401(k) or even an IRA? Yeah, right! Get a tax deduction when you find yourself young and in the relatively low tax bracket in order to pay taxes about the money you are taking out if you are retired and in a very higher tax bracket? Yeah, this is a good deal. Or, consider the difference in tax rates on capital gains and dividends in case you are not in a very 401(k) or IRA versus the standard income tax rates around the earnings whenever you pull them through your 401(k) or IRA.



So you now are thinking that you need to just put money into Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds result in capital gains taxes in the event the Fund Managers trade them even when you don't see the bucks! You have to pay taxes although Fund might actually have gone down in value! And what in regards to the lost opportunity price of that money that you will be now paying in taxes that one could have place into other investments? At least with all the Lottery, you know the complete amount of taxes you will pay if you win so you only have to pay taxes in case you do win.



Yes, you say, though 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 the stock exchange and neither does the Fund Manager. The market decreases, the same is true your Fund. At least you recognize that you will be gambling if you play the Lottery. You don't have the government, financial institutions and your employer telling you the Lottery is a great investment. And your employer doesn't go so far as to match the sum you put in the Lottery as 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 in regards to the chances of success in a very Mutual Fund!



But surely, you say, there exists a better chance of making money in a Mutual Fund than there is in the Lottery? Hardly. There may be less of a chance of losing every one of the money you put in a Mutual Fund than there exists losing most of the money you put to the Lottery. But you are never likely to win big in a Mutual Fund. In fact, Mutual Funds are designed to minimize your returns by setting up a "balanced portfolio." If they could minimize your risk in the market itself, this might be okay. But the problem is nobody can minimize the risk with the market without sophisticated hedge strategies that aren't typically found in Mutual Funds. At least with the Lottery, you have a possibility of winning big. And you can sleep through the night, as you aren't wondering if the likelihood of winning are going down overnight because of something that is situated Tokyo.



You say you never like the idea that many of your Lottery gamblings 're going to support government programs? Where do you think most of website 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 most of the risk, you set in most of the capital, but a lot of the earnings from the Mutual Fund go on the Fund manager along with your investment advisor. At least using the Lottery, the funds are inclined to worthy causes, including the Arts.



Of course, I would never advise a customer to rely for the Lottery for their retirement. But neither would I advise them to depend on Mutual Fund investments. For my dollar, the Lottery is more fun and at least I know I'm gambling. But if you want to retire, have a look at other investments and help someone who would prefer to put within the time to help you retire soon and retire rich. Financial freedom is accessible to those who're willing to work and learn about it, however, not likely for those who want to depend upon such risky investment strategies as Mutual Funds.



Warmest Regards,



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