Investments To Avoid

Investing Basics, Planning & Saving, Retirement & Investing
on March 21, 2013

There are many investment opportunities available to those who want to grow their money over the long haul. However, not every investment opportunity is right for you. By avoiding these four kinds of investments, you can keep your money safe and your portfolio balanced for years to come.

1) Commodities

Many investors will invest in commodities such as oil because they think it is an easy way to make a lot of money quickly. However, an investment in the wrong commodity can quickly wipe away your money. Therefore, do not invest in items such as sugar or gold unless you are willing to deal with the volatility that comes with this type of investment.

2) Collectibles

The problem with collecting things is that their value can rise and fall on whim. For example, let’s say you collect sports memorabilia because your a big baseball fan. If you had a Pete Rose autograph in 1980, it may have been worth a lot of money. However, it probably isn’t worth as much because he is reviled figure and a suspected cheater. Therefore, your investment is now worth nothing because of something you couldn’t have foreseen happening.

3) Certificates Of Deposit

A certificate of deposit is a safe investment if you are merely looking to not lose your money. However, they are a terrible investment if you are looking to grow your money. The issue with a CD is that you are not going to get much interest. Average interest rates are less than 1 percent. Some don’t offer any interest at all.

4) Single Shares Of Stock

If you have to invest in the market, do so through a mutual fund. When you have a single stock, you are vulnerable to the whims of the market. On the other hand, mutual funds are diversified and offer protection against any particular stock dragging your portfolio down.

Although these investments may work out for some people, they should largely be avoided by the average investor. These investments offer either little return on your investment or too much risk of losing your investment. Therefore, stay away from stocks, CDs and commodities if you are serious about making money for the long-term.

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