Types of investments you should avoid in today’s world must really be a thing which may have to demand some standards of carefulness because sustaining your finances could be a bit of a work in itself and you know, you do not have any choice than to keep it any way. Especially in a world where economic balance is somewhat hard to maintain, no one may be ready enough to afford losing one’s money in some dead-end business or businesses.
This very creepy situation then calls for you to be extra careful with what business, venture, or investment to dabble into so as not to fall victim to some unimaginable financial loss that may at the end of the day put you in an uncontrollable crisis.
Types of Investments You Should Avoid.
The rain check this content will be dishing out to you in case you have been wondering which types of investments you should avoid is the list of businesses that may shove you into some financial hell you have never prepared for:
1. Annuities
One of the types of investments you should avoid is annuities. What then is annuities? An annuity is a series of payments made at equal intervals. The two main types of annuities are fixed and variable annuities. With a fixed annuity, you pay a premium to an insurance company in exchange for guaranteed income payments, either for a certain period of time or for your entire life. With a variable annuity, your money is invested in mutual fund-like buckets that provide a variable rate of return that might ultimately be more or less than with a fixed annuity.
2. Non-Public Offering
Non-Public Offerings are sales of stocks that don’t trade on the public markets. It is a funding round of securities which are sold not through a public offering, but rather through a private offering, mostly to a small number of chosen investors. To invest in a non-public offerings which is also called private placements, you must be an certified investor. There are certain situations where private placements are legitimate investments. However, for the average investor — who can’t possibly get enough information on a private placement to determine its legitimacy — these types of investments are bad and must be considered one of the types of investments you should avoid.
3. Ponzi Schemes
A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. This is especially common as many people now engage in it more because of its money-doubling nature which is why it is easily used to scam a lot of people and rob them of their hard-earned fortune. It is therefore one of the types of investments you should avoid if at all you do not want to experience any form of loss in you finances.
4. Sub-Prime Mortgage
Sub-prime mortgages are mortgages taken out by the least credit-worthy customers, meaning they have very low credit scores. Statistically speaking, borrowers with lower credit scores are more likely to default on their loans. These mortgages do pay higher interest rates to investors, but they involve significant additional risk and thus they are among the types of investments you should avoid.
