09 Feb 10 Bad Investment Options You Should Avoid
In one of his famous quotes, Robert G. Allen said,
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”
This quote essentially confirms that if you really want to earn more, you need to take some risk by investing in something that can give you proper returns. Investing decisions are not something that can be taken for granted. You really need to do a lot of market research before coming up with the right choice. I personally think that there are some entities in which you should not invest at all. I have listed these in the headings below.
Leveraged ETFs
“ETF stands for exchange-traded funds.”
ETF stands for exchange-traded funds. These are the kinds of funds that can really damage investors’ portfolios. Leveraged ETFs can track the returns of index funds. However, they claim to provide returns regardless of market conditions. These funds can be affected by price changes and have not been designed for long-term investing. The big winning days get cancelled out by the losing days if you hold these funds.
Savings Bonds
According to Scott Stratton, saving bonds used to be the go-to financial gift for kids – not any more. Scott is of the opinion that one should search for stocks in better companies that can pay higher dividends over the years.
Airlines
It is highly recommended that you never waste your investment on an airline. An airline is nothing more than a commodity at the end of the day. No control exists when it comes to the input cost. Besides, it is not everybody that is even able to properly invest in an airline. In most cases it is reserved for billionaires.
“If the stock market is not thriving in your country then you should never invest in treasury bonds.”
Treasury Bonds
If the stock market is not thriving in your country then you should never invest in treasury bonds. In the case of lower rates, the real saving rate goes negative. If your market conditions are not good then scrap the thought of investing in treasury bonds altogether.
House
Yes, a house of your own really looks like an impressive idea on paper. However, if you do not have the means then never invest in such an entity. Initially you may manage to purchase a house, but in the long run the mortgage will really give you a tough time especially if you are suffering cash shortages. Do some homework, like looking into property taxes etc. Even if you are able to purchase a house of $500,000, it does not necessarily mean that you should.
Penny Stocks
Penny stocks are basically common shares produced by a small company that can trade for less than a US dollar. Due to some hardcore technical financial aspects, I personally recommend that you should never invest in these kinds of stocks.
Hedge Funds
It can be very difficult to suppress the urge to invest in hedge funds; just remember that these funds are risky, illiquid and expensive as well.
Currencies And Commodities
“Both commodities and currencies are not a suitable investment.”
Both commodities and currencies are not a suitable investment, so don’t look for your bright future in either of them. They both involve some serious leverage; do not be fooled by the idea that you can make high returns.
IPOs
It is not advisable that you should invest in IPOs. There are many reasons for this; one major reason is that IPOs have one of the largest risks associated with them of any investment type.
Bitcoin
Lastly it is advisable not to invest in Bitcoin, though this also depends on the rate of Bitcoin. The rate of Bitcoin keeps fluctuating so perhaps keep an eye out for the right opportunity.
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