Investing within the Lottery over Mutual Funds???

Even though I am not an investment advisor rather than 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 smart investment vehicle over which they have got little control concerning investment and timing and many people end up choosing Mutual Funds as his or her 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 chance of winning? Where millions of other everyone is putting in money in hopes of winning the important one? Where a lot of the money visits someone else and also the chances are strong that I will miss part or every one of my money?



Wait a minute - shall we be talking now about the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little potential for winning. Sounds like nearly the same as Mutual Fund investment in a very 401(k) or IRA. After all, what exactly 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 on the radio going into work. The interviewer was asking the representative of a large Mutual Fund concerning the performance in the Fund. The Rep responded the Mutual Fund had risen in value by around 20% per year for the prior two years. But when the interviewer asked about the average return to the typical investor in the 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 on the Lottery, where everybody knows the exact odds of winning and the exact amount that may be won!



But what in regards to the great tax attributes of putting my money in to a 401(k) or even an IRA? Yeah, right! Get a tax deduction if you are young and in a very relatively low tax bracket so you can pay taxes around the money you're taking out when you find yourself retired and in a higher tax bracket? Yeah, this is a good deal. Or, look at 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 when you pull them through your 401(k) or IRA.



So you now are thinking that you can just purchase Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds lead to capital gains taxes in the event the Fund Managers trade them while you don't see the bucks! You have to pay taxes although the Fund could possibly have gone down in value! And what about the lost opportunity cost of that money that you're now paying in taxes that you might have put into other investments? At least with all the Lottery, you know the precise amount of taxes you will probably 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 don't have any 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, the same is true your Fund. At least you recognize that you are gambling once you play the Lottery. You don't have the us government, banking institutions and your employer telling you how the Lottery is an excellent investment. And your employer doesn't go so far regarding match the amount you put in the Lottery want it might together with your 401(k). Nobody is lying to you in regards to the Lottery being gambling, but those invoved with positions of authority are lying to you concerning the chances of success inside a Mutual Fund!



But surely, you say, there exists a better possibility of making money inside a Mutual Fund than there is within the Lottery? Hardly. There may be less of a possibility of losing every one of the money you put in to a Mutual Fund than there's losing all the money you put in the Lottery. But you are never gonna win big in a Mutual Fund. In fact, Mutual Funds are designed to minimize your returns by developing a "balanced portfolio." If they could minimize your risk with the market itself, this might be okay. But the problem is always that nobody can minimize the risk with the market without sophisticated hedge strategies which aren't typically used in Mutual Funds. At least with the Lottery, you have a chance of winning big. And you can sleep during the night, when you aren't wondering if the odds of winning are inclined down overnight due to something that is situated Tokyo.



You say you don't like the idea that a lot of of your Lottery gamblings are going to support government programs? Where do you think almost all of the earnings from your Mutual Fund are inclined? No, to not support government programs, but rather to support ignore the advisor's along with the Mutual Fund manager's retirement? You take every one of the risk, you set in most of the capital, but a lot of the earnings through the Mutual Fund go on the Fund manager plus your investment advisor. At least while using Lottery, the funds are getting to worthy causes, for example the Arts.



Of course, I would never advise litigant to rely about the Lottery for retirement. But neither would I advise them to depend upon Mutual Fund investments. For my dollar, the Lottery is more fun and at least I know I'm gambling. But should you want to retire, take a look at check here other investments and use someone who would like to put within the time to help you retire soon and retire rich. Financial freedom is available to those who are willing to work and discover it, however, not likely for individuals who want to depend on such risky investment strategies as Mutual Funds.



Warmest Regards,



TomArticle Source:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Comments on “Investing within the Lottery over Mutual Funds???”

Leave a Reply

Gravatar