4 of the Most Dangerous Places to Invest Your Money
Choosing how to invest your money can be difficult. Certain investments may initially look attractive, but upon closer inspection may have hidden dangers that need to be avoided. The stock market is a good example of an investment that can be dangerous for investors that don’t know what they are doing.
A few people have made a lot of money from investing their money in the stock market. However, many more people have invested their money in a “sure thing” and lost everything. Below is a list of four of the most dangerous places to invest your money.
1. Real Estate
Unless you’re an expert, purchasing real estate as an investment is just simply not a good idea. The risks are just too high, especially with the instability of the real estate market in the past decade. In many states and locations, property prices are completely stagnant. In just as many places, housing prices are plunging.
All of the prime real estate locations are also likely to be very expensive to begin with, and prices are likely to stay fairly steady. There isn’t much opportunity to make much money in these areas, since profits are predicated upon fluctuations in value. The best approach is to find areas which are poised for major growth and buy properties before the boom. Just understand that predicting what areas will have growth is always a gamble in an economy that seems to be constantly seesawing up and down.
2. Collectibles
In the past, snatching up hot collectibles seemed like an excellent way to make it rich. However, after the recent recession, the collectibles market has been pretty much decimated. When people don’t have disposable income, collectible sales simply don’t happen. Even when the economy is doing good, it is not assured that an investment into a certain kind of collectible will pay off. Stamps, for one, used to be very valuable. Then the majority of stamp collectors started retiring and passing on due to old age. This has completely depleted the market, making once valuable stamps worthless.
3. Jewelry
Jewelry should be used for wearing, not as a long-term investment strategy. Most jewelers are deceptive in how they claim jewelry will increase in value over time. The truth is, most kinds of jewelry tend to depreciate in value as soon as they leave the store, just like a car when you drive it off the lot. Jewelry can be a good investment in the sense that it can lead to happiness in marriage and can show someone you love your appreciation, but it should not be counted on as a financial strategy that will yield financial rewards.
4. Internet Based Stocks
At one point it was predicted Facebook’s public offering of stock would be a sure thing. However, a lot of people lost their shirts over that one. Investors are wary of stocks that are based purely on internet based companies. Part of this is due to lessons learned from the popping of the “dot com bubble” in the early 2000’s when companies like Pets.com infamously went bust.
While companies like Facebook may seem like a cultural force here to stay, many people remember a similar website called MySpace that was once as popular but is now used by almost no one. One of the main problems with these sites is that there is no clear track to monetization. In the case of Facebook, there is no clear product or service for sale that can bring in residual profits. Avoid investing in most of these situations where there is no clear path to monetization. Instead, when looking for stock market recommendations, go with companies with a longer track record.
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Category: Investing
