Investing within the Lottery over Mutual Funds???Even though I am not an investment advisor and don't hold myself out as you, clients always 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 in my profit sharing plan or monthly pension?
Contrary to popular belief, none of such are wise investments. Why? Among other reasons, they all involve putting money into an investment vehicle over which they've little control regarding investment and timing and many people wind up choosing Mutual Funds as his or her investment within diets. In fact, putting your cash into the Lottery has to be better investment.
Really? The Lottery as a smart 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 everyone is putting in money in hopes of winning the big one? Where the majority of the money would go to someone else and also the chances are strong that I will forfeit part or all of my money?
Wait a minute - are we talking now regarding the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little probability of winning. Sounds like as being similar to Mutual Fund investment in a very 401(k) or IRA. After all, exactly what are my odds of retiring on Mutual Fund investments? Not very high, actually.
A year or two ago, I was hearing a financial program around the radio on my way into work. The interviewer was asking the representative of a substantial Mutual Fund regarding the performance with the Fund. The Rep responded how the Mutual Fund had risen in value by typically 20% annually for the prior couple of years. But in the event the interviewer asked regarding the average return to the common investor within the Fund, the Rep responded the average investor had actually lost 2% a year. Why? Because from the timing of moving in and out of the market. Compare this on the Lottery, where everyone should know the exact odds of winning and also the exact amount that might be won!
But what in regards to the great tax benefits of putting my money into a 401(k) or an IRA? Yeah, right! Get a tax deduction when you're young and in a relatively low tax bracket in order to pay taxes on the money you take out when you're retired and in a higher tax bracket? Yeah, what a good deal. Or, look at the difference in tax rates on capital gains and dividends if you are not in a very 401(k) or IRA versus the standard income tax rates on the earnings if you pull them from your 401(k) or IRA.
So now you are thinking that you can just purchase Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds result in capital gains taxes if the Fund Managers trade them while you don't see the money! You have to pay taxes although Fund might actually have gone down in value! And what regarding the lost opportunity price of that money that you are 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 will probably pay in case you win and also you only have to pay taxes if you do win.
Yes, you say, nevertheless the Lottery is gambling and I have no california lottery online games control over whether I win or lose. You are right. The Lottery is gambling. But same goes with a Mutual Fund. You have no control over trading stocks 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 government, finance institutions and your employer telling you that the Lottery is an excellent investment. And your employer doesn't go so far as to match the total amount you put into the Lottery want it might using your 401(k). Nobody is lying to you about the Lottery being gambling, but those invoved with positions of authority are lying to you about the chances of success in the Mutual Fund!
But surely, you say, you will find there's better possibility of making money in a very Mutual Fund than there is in the Lottery? Hardly. There may be less of a possibility of losing every one of the money you put into a Mutual Fund than there's losing every one of the money you put into the Lottery. But you are never likely to win big in the 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 nobody can minimize the risk of the market without sophisticated hedge strategies which are not typically employed in Mutual Funds. At least with the Lottery, you have a probability of winning big. And you can sleep during the night, as you aren't wondering if the probability of winning 're going down overnight as a result of something that is situated Tokyo.
You say you don't like the idea that many of your Lottery gamblings are getting to support government programs? Where do you think almost all of the earnings from your Mutual Fund are going? No, to not support government programs, but alternatively to support ignore the advisor's along with the Mutual Fund manager's retirement? You take all of the risk, you place in all the capital, but a lot of the earnings from your Mutual Fund go on the Fund manager plus your investment advisor. At least with the Lottery, the funds 're going to worthy causes, like the Arts.
Of course, I would never advise litigant to rely about the Lottery because of their retirement. But neither would I advise them to depend 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, have a look at other investments and help someone who will to put in the time to help you retire soon and retire rich. Financial freedom is available to those who are willing to work and find out about it, although not likely for individuals who want to count on such risky investment strategies as Mutual Funds.