Worst Investments

I was thinking the other day that while people often talk about the best investments out there, rarely do they talk about the worst investments you can make. It’s as if there is an assumption that everyone will magically know a bad investment when it appears. While common sense can go a long way in helping you avoid making a bad investment, doing your research and knowing which investments to avoid in the first place can help a lot. While this list isn’t comprehensive, it points out some of the worst investments that an average person can make.

Timeshare: Timeshares are often marketed as an investment because it’s a lot easier to sell something that appears to be something

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13 Responses to Worst Investments

  1. Loi Tran says:

    Gambling can become an investment if you play the right game. Games where you have an edge against another player such as Poker(Texas Hold ‘em, Omaha). There are some professional sports bettors and poker players that do that for a living. That is because they are playing against another person whose skill is lower than theirs. Professionals have discipline when they play.

    Does that mean people should gamble? Less than 1% of people can be successful at gambling, so I’d try to find something else.

    I think a lot of collectibles are bad investments also. Collectibles require a vast amount of knowledge about the item the person is buying and they are not very liquid as well.

  2. Retireat30 says:

    Great post. So often smart people get lured into “alternative” investments by dreams of insane returns.

    I think the most important point you made is: Don’t invest in things you don’t understand fully, especially if they are offering outstanding returns.

    That said, there is no better education than a little skin in the game. I’ve just lost $200 on an options deal that is eating into other great investments – but the education I got from losing that $200 is worth it.

    So, I guess a better statement is “Don’t invest MORE THAN YOU CAN AFFORD TO LOSE in things you don’t understand.”

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  5. Chester White says:

    On timeshares: Your advice is almost always correct, but I think possibly the Disney Vacation Club timeshares are an exception. Yes, you can buy them somewhat cheaper on the resale market than direct from Disney, but almost everyone who bought in since 1992 has made money upon resale, or only lost a few percent, while saving a bunch on their room stays.

    And you get bonuses and discounts of various kinds (like $100 off your annual passes).

    Investment tips and investing “programs” are worthless. If somebody really knew how to make 50% a year in the market:

    1. He wouldn’t tell you
    2. If he did tell you he’d charge you billions of dollars, and it would be worth it.
    3. He’d be sitting on a beach trading on his Blackberry for 5 minutes a day at most.

  6. Suresh says:

    You may be right about stones. But, concerning gold (22K+) and silver jewelry, it is a sensible store of wealth for people in developing countries that lack financial institutions with an FDIC-like safety net. Additionally, many developing countries have high inflation, and gold at least keeps up with inflation. In contrast, interest on money in the bank may not match the inflation rate, in which case the saver is losing money in real terms, albeit not in nominal terms.

    Putting aside the value of gold & silver as inflation hedges and stores of wealth, I believe we are in a commodities bull market now. So, gold and silver have significant potential as appreciating assets along with other commodities.

  7. mike says:

    Your comment on precious metals preserving value in some cases is true, but the way to achieve that is not jewelry. This is because the value of jewelry has both the value of the materials and the value of the time required to craft it. These people would be better trying to buy it in less labor intensive forms.

  8. derrik says:

    This kind of made me laugh because it should all be so obvious. I am always surprised at the “get rich fast” ideas.

    I can say that the average person that asks me about foreclosures and making money on that is the last person that should be thinking about investing in real estate. It just aint that easy.

  9. amy says:

    is there anyway for timeshares to become a good investment? I am looking at Westgate Resorts right now and I don’t know exactly what I should be looking for. Any suggestions to make this for out for me?

  10. pfadvice says:

    Is there anyway for timeshares to become a good investment? I am looking at Westgate Resorts right now and I don’t know exactly what I should be looking for. Any suggestions to make this for out for me?

    The simple answer is “No” – timeshares are not an investment and should never be viewed as one. Like a car, they are a depreciating asset. There may be other reasons to purchase a timeshare (although I highly recommend not doing so), but an investment is definitely not one of them.

  11. amy says:

    what kind of investment can a person who doesn’t much money and the best credit make? Is there any investment out there that the “little” people can make that can generate a decent return.

  12. True, viewing life insurance as an investment is incorrect. It does however have a place and can serve a great purpose in someones overall financial security if designed properly and with the right company. It can help stable a program that is weighed heavily in aggressive funds. To totally eliminate it as an option in your “financial health” is a mistake. I advise you speak to a professional before you make any decisions.

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