People often talk about the best investments out there, but they rarely talk about the worst investments you can make. There seems to be an assumption that everyone will magically know bad investments when they appear. While common sense can help you avoid bad investments, doing research and understanding which investments to avoid in the first place can help.
While this list is not comprehensive, it points out some of the worst investments that the average person can make.
So these are the worst investments out there.
Timeshare vacation: Timeshare is usually sold as an investment, because it is much easier to sell something that seems to make money than something you lose a lot of money. Unfortunately, a good salesman can make connections that housing is a good investment, and timesharing is a bit like housing, so even if that isn’t true at all, it’s a good investment. An investment could have added value, but the moment you sign on the dotted line, a timeshare usually loses between 50 and 80% of its value.
life insurance: If you have already spoken to a life insurance agent, you may hear about the investment in life insurance. Again, insurance agents do this for a simple reason – it is much easier to sell “investment” than to sell something that is collected only when death. You should look at and consider buying life insurance to exactly purchase – life insurance – rather than investing.
gamble: While this seems obvious, there are a lot of people who gamble that they will make money. Whatever you play, the odds are against you. If you want to bet as entertainment, that’s great, but don’t think it’s any kind of investment.
Tips from unknown sources: They arrive in your email box again and again. Popular stock tips for various companies that are about to take off. Or maybe you heard a conversation about popular tips in the AM elevator. Tips for investing from someone you don’t know are almost always a terrible investment. Since you don’t know the source, you can never determine the claim filed. Based on reliable research, not what you eavesdrop on.
Investments you don’t know exactly: Investing in anything you don’t fully understand is a disaster. This is not to say that the investment tool itself is not necessarily bad, but that you cannot accurately judge when to hold and sell when you do not understand how it works. Before investing in anything, you should always do thorough research and know exactly how it works so you can be prepared when you need to make a decision.
Jewelry: Sometimes jewelers will try to convince you to buy a bigger ring, a more expensive necklace or a higher quality stone would be a good investment. The truth is that stones and jewelry purchased by ordinary people will lose value. This is especially true for diamonds. Laboratory-grown diamonds are becoming more and more important, which means the resale value of diamonds is greatly reduced. Leave investment jewelry to experts and buy what you like, not as an investment.
Get rich quickly, HYIP plans, etc.: As the saying goes, if “sounds too good, that may be true, that may be”. Many of them are based on initial cash expenses, hoping you can take the “Okay, this is just a few dollars, so why not give it a try” attitude. Finally, you will lose everything and suffer 100% of the loss.
MLM Company: Whether it is advertised as multi-layer marketing, online marketing or other names, if you have to recruit someone else to make money, you may lose a lot in the process. In fact, a 2017 study by the Institute for Consumer Awareness found that 99% of MLM recruits lost money (here).
car: Unless you are looking at antiques or classic cars that ordinary people don’t have, a car is not a real investment. However, buying more money on a car than you need is a waste of money. Unlike a home, if you buy a bigger house, it usually comes at a price in appreciation, and the opposite will happen to the car. Buy only what you need for maximum profit. If you are buying one, buy a resale for 2 to 3 years old for the best value, not only at the cheapest cost, but also at a lower insurance bill.
There are other terrible investments out there, and knowing what to avoid when investing is as important as knowing what a good investment is.
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