Even though I am not a good investment advisor rather than hold myself out as you, clients always ask me what to do to prepare for retirement. Should I max out my 401(k) contribution? Should I do an IRA? Should I put more during my profit sharing plan or monthly pension?
Contrary to popular belief, none of these are wise investments. Why? Among other reasons, each of them involve putting money into a smart investment vehicle over which they've little control concerning investment and timing and most people end up choosing Mutual Funds his or her investment within diets. In fact, putting your dollars into the Lottery has to be better investment.
Really? The Lottery as an investment vehicle? Sound crazy? Gamble my retirement funds away in a government-sponsored game of chance where I have little possibility of winning? Where millions of other individuals are putting in cash in hopes of winning the important one? Where most of the money would go to someone else and also the chances are strong that I will miss part or most of my money?
Wait a moment - shall we be held talking now regarding the Lottery or about Mutual Funds? Hmm, a government sponsored program where I have little chance of winning. Sounds like nearly the same as Mutual Fund investment inside a 401(k) or IRA. After all, what exactly are my likelihood of retiring on Mutual Fund investments? Not very high, actually.
A few years ago, I was listening to 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 in the Fund. The Rep responded how the Mutual Fund had risen in value by around 20% each year for the prior 2 yrs. But once the interviewer asked concerning the average return to the average investor inside Fund, the Rep responded how the average investor had actually lost 2% each year. Why? Because of the timing of opting and out from the market. Compare this to the Lottery, where everyone should know the exact probability of winning as well as the exact amount that may be won!
But what regarding the great tax features of putting my money in to a 401(k) or 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 take out when you find yourself retired and in the higher tax bracket? Yeah, that's a good deal. Or, take into account the difference in tax rates on capital gains and dividends should you are not in a very 401(k) or IRA versus the ordinary income tax rates for the earnings whenever you pull them through your 401(k) or IRA.
So you now are thinking that you should just spend money on Mutual Funds outside your 401(k) or IRA? Wrong again. Mutual Funds result in capital gains taxes if the Fund Managers trade them even though you don't see the bucks! You have to pay taxes even though the Fund could possibly have gone down in value! And what about the lost opportunity expense of that money you are now paying in taxes that one could have place into other investments? At least while using Lottery, you know the actual amount of taxes you could pay should you win so you only have to pay taxes should you do win.
Yes, you say, nevertheless the Lottery is gambling and I have zero 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, so does your Fund. At least you recognize that you're gambling once you play the Lottery. You don't have government entities, banking institutions and your employer telling you that this Lottery is a superb investment. And your employer doesn't go so far regarding match the total amount you put to the Lottery want it might using your 401(k). Nobody is lying to you regarding the Lottery being gambling, but those in positions of authority are lying to you concerning the chances of success inside a Mutual Fund!
But surely, you say, there is a better possibility of making money inside a Mutual georgia lottery games have best odds Fund than there is within the Lottery? Hardly. There may be less of a potential for losing all the money you put in to a Mutual Fund than there's 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 designed to minimize your returns by creating a "balanced portfolio." If they could minimize your risk of the market itself, this might be okay. But the problem is that nobody can minimize the risk of the market without sophisticated hedge strategies which aren't typically employed in Mutual Funds. At least while using Lottery, you have a chance of winning big. And you can sleep at night, when you aren't wondering if the odds of winning are getting down overnight as a consequence of something that occurs in Tokyo.
You say you don't like the idea that a lot of of your Lottery gamblings 're going to support government programs? Where do you think the majority of the earnings from your Mutual Fund are getting? No, to not support government programs, but instead to support your investment advisor's along with the Mutual Fund manager's retirement? You take all the risk, you put in every one of the capital, but a lot of the earnings in 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 litigant to rely for the Lottery for his or her 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 in case you want to retire, examine other investments and help someone who would prefer to put inside the time to help you retire soon and retire rich. Financial freedom can be obtained to those that are willing to work and understand it, although not likely for individuals who want to count on such risky investment strategies as Mutual Funds.