While people are quick to talk about the best investments they have ever made, few are willing to speak up about the financial blunders their poor investment choices made. Here are the top five worst investments to avoid, for they continually pull money out of your account without giving anything in return:
A timeshare, while a good business model in theory, is a poor investment choice. There is nothing wrong with the business model; however, timeshares offer little in a return investment.
Timeshares are set up by developers and hotel corporations to sell shared interest in their properties. However, the resale of a timeshare is usually always lower than its original price. In some cases, secondhand timeshares sell for 50% or less of the original price, which leaves the first investor out a lot of money.
And, timeshares require up to thousands of dollars of maintenance each year. Unless an investor uses the timeshare often, it is less expensive and more practical to pay for a vacation.
- Penny Stocks
Penny stocks, which are stocks priced under a $1 per share, are usually priced low for a reason. Trade volumes are low, which allows for the prices of these stocks to be easily manipulated by websites and marketers. While there are actually legitimate penny stocks, they can be hard to find in a market filled with fraudulent ones.
- Picking A Poor College
Higher education is an investment in your future. However, there are plenty of universities out there that are not reputable, leaving you with a pile of student loan debt and little employment prospects.
When it comes to investing in your future, invest in a school that has a high statistic of post-grad employment, quality professors who have reputable contacts, and is a highly respected institution. Student loans come at a hefty price, thus ensure you are investing in something that will pay off.
- Expensive Homes Above Your Means
While purchasing a home is a valuable asset, purchasing a home you cannot afford will most likely never become a valuable asset. Many people have fallen under the pretense that a bigger, more expensive home means a bigger return investment. Unfortunately, when you have to cash in your 401k to pay for the mortgage, the return investment will not nearly be enough. Just because you are approved for an expensive mortgage does not mean you should pay for it.
- Investments You Didn’t Research
If you do not do accurate research on an investment, there is a good chance it will be a poor financial decision. For example, some investments have fees and surrender charges you need to clarify before buying in. There are also investments that require you to put work into in order to yield any profit.
Poor investments can leave you with less money than you started with, a pile of debt, and uncertainty of how to pay for it. While there are plenty of companies like HotPayday.com that can help you, the bottom line is that you should do careful investigation about an investment before opening your pockets.