Investing is an important part of your financial future, but it’s also an area where you can take on too much risk says Vincent Camarda. This article will help you figure out which investments aren’t worth the time or money—and why.
A limited partnership.
A limited partnership is a business that’s open to investors, but the investor doesn’t actually own the business. Instead, they purchase a share of ownership from another partner.
This type of investment can be extremely complex, and it’s not one for beginners. In fact, many seasoned investors don’t recommend investing in limited partnerships since they’re more complicated than other investments and may not be worth the hassle if you don’t have a lot of experience with such things.
A risky stock.
Most people know that the stock market is risky, but they don’t realize how much risk there is. This can be especially true for young investors who have little money to invest and don’t have years to wait for their investments to recover.
The bottom line is this: if you want a long-term investment that will keep your money safe, stick with cash or low-risk bonds instead of stocks.
Precious metals are not a good investment. They are too volatile, not liquid and not a safe investment. If you want to invest in gold or silver, buy it as jewellery for your wife or mother-in-law (or yourself).
A rental property.
Buying a rental property is one of the most common mistakes people make. They think it’s a good investment, but rentals can be expensive to buy and maintain. If you have your heart set on building a portfolio of rental properties, know that they tend to be illiquid—they’re not easy or quick to sell.
If you do decide to take the plunge, make sure you understand what’s involved in buying and maintaining a rental property. Real estate agents may try to convince you that all maintenance costs will come out of tenant rent payments, but this isn’t true; if there’s major damage related to neglect or abuse by former tenants (e.g., holes in walls), those expenses will come out of your own pocketbook instead of theirs.
Make wise decisions about your finances so that you minimize risk as much as possible.
There are times when you have to take risks in order to make the most of your money, but if you’re not prepared for them and aren’t able to afford losing that money, then the best alternative is just not taking that risk at all. When it comes down to it, there are no guarantees in life. You could go ahead and invest all your money in stocks and lose everything when the market plummets—or maybe even worse: Maybe your home gets destroyed by a tornado (literally) or an earthquake (figuratively). Maybe your favorite sports team loses every game they play this season! The list goes on… There’s no way around it: Investing can be risky business. The only way around this is by making wise decisions about your finances so that you minimize risk as much as possible.
Even though you may have heard of these investments before, we hope this article has given you some insight about why they are not always the best options. If you’re looking for an investment that will grow your portfolio and provide a steady stream of income, consider investing in the stock market.