Investing within the Lottery over Mutual Funds???

Even though I am not a good investment advisor and not hold myself out as you, 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 in my profit sharing plan or pension plan?



Contrary to popular belief, none of such are wise investments. Why? Among other reasons, each of them involve putting money into a great investment vehicle over which they have little control as to investment and timing and most people turn out choosing Mutual Funds his or her 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 probability of winning? Where millions of other individuals are putting in take advantage hopes of winning the large one? Where most of the money visits someone else and the chances are strong that I will miss part or every one of my money?



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



A year or two ago, I was hearing a financial program about the radio walking on into work. The interviewer was asking the representative of a big Mutual Fund regarding the performance from the Fund. The Rep responded the Mutual Fund had risen in value by an average of 20% each year for the prior two years. But in the event the interviewer asked concerning 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 everybody knows the exact chances of winning and also the exact amount that might be won!



But what in regards to the great tax advantages of putting my money right into a 401(k) or even an IRA? Yeah, right! Get a tax deduction if you are young and in the relatively low tax bracket so that you can pay taxes around the money you adopt out if you are retired and inside a higher tax bracket? Yeah, which is a good deal. Or, take into account the difference in tax rates on capital gains and dividends if you are not inside a 401(k) or IRA versus the standard income tax rates about the earnings if you pull them out of 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 cause capital gains taxes when the Fund Managers trade them even if you don't see the money! You have to pay taxes although the Fund might actually have gone down in value! And what concerning the lost opportunity expense of that money that you're now paying in taxes that one could have placed into other investments? At least with the Lottery, you know the exact amount of taxes you will pay in case you win so you only have to pay taxes if you do win.



Yes, you say, however 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 same with 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 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 amount you put into the Lottery as it might using 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 Mutual Fund!



But surely, you say, website there's a better probability of making money in a Mutual Fund than there is inside the Lottery? Hardly. There may be less of a possibility of losing all the money you put right into a Mutual Fund than there is losing all of the money you put in the Lottery. But you are never planning to win big inside a Mutual Fund. In fact, Mutual Funds are designed to minimize your returns by developing a "balanced portfolio." If they could minimize your risk from the market itself, this might be okay. But the problem is that nobody can minimize the risk in the market without sophisticated hedge strategies which aren't typically found in Mutual Funds. At least with all the 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 are inclined down overnight as a result of something that occurs in Tokyo.



You say you do not like the idea that most of your Lottery gamblings are inclined to support government programs? Where do you think most of the earnings from a Mutual Fund are getting? No, never to support government programs, but alternatively to support neglect the advisor's and the Mutual Fund manager's retirement? You take every one of the risk, you add in every one of the capital, but a lot of the earnings in the Mutual Fund go to the Fund manager along with your investment advisor. At least while using Lottery, the funds are going to worthy causes, including the Arts.



Of course, I would never advise a client to rely about the Lottery for 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 should you want to retire, take a look at other investments and use someone who will to put inside the time to help you retire soon and retire rich. Financial freedom can be obtained to those who will be willing to work and learn about it, and not likely for many who want to count on such risky investment strategies as Mutual Funds.



Warmest Regards,



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