10 Things People Should Never Pour Money Into

Tulips. Never invest in tulips. Now that you’ve learned that lesson — know that spring-blooming perennials aren’t the only highly volatile investment you should avoid during these highly volatile times. If you disregard the internet’s advice and stubbornly flush your portfolio down the drain, that will be on you.

1. Penny Stocks

Remember that scene in The Wolf of Wall Street where Leo DiCaprio’s Jordan Belfort dupes one gullible, financially unsophisticated mark after the next into investing their kid’s college fund in penny stocks? Don’t let that be you on the other end of the phone line.

Penny stocks are the lottery tickets for investing. Unless you’re in Congress, you’ll never be on the right side of a penny stock pump and dump. You may as well burn the money and make S’mores. At least you’ll get a sweet treat out of it.

2. The Lesser Cryptos

There are still many true believers in Bitcoin, Ethereum, and even the next tier of coins. While there is proven volatility in these crypto pack leaders, you can’t fault anyone for hedging their stocks and bonds with a bit of the blockchain.

You can fault someone for gambling on the lesser coins, the penny stocks of the crypto world that could plausibly fall to zero.

3. Subprime Mortgages

You lost your job. Your neighbor lost their house thanks to a variable interest rate. You saw (or read) The Big Short. You lived through the aftermath of subprime mortgages. Do you want to do that again?

Everyone knows that requiring 0% down and issuing mortgages to underqualified recipients is as bad an idea as building a home with cotton candy. Yet those subprime mortgages investment bankers knew and loved are back under the revitalized brand name nonprime mortgages. If you (or your bank) invest in them, you’re begging for a Lehman Brothers-esque fate.

4. Timeshares

When you “invest” in a timeshare, you’re not really investing. You’re voluntarily sticking your foot in an oversized financial bear trap, along with three other heads of household who simultaneously stick their feet in with you.

In many cases, the only person who holds the key to the bear trap is the Grim Reaper because you’re locked into that timeshare until death do you part. Best case, a costly timeshare exit agency delivers you from the timeshare.

5. Collectibles

To be clear, you’d be a fool to turn down a mint-graded Michael Jordan rookie card if someone offered it to you for a pittance. But sports cards, comic books, and classic cars don’t sell for a pittance. High-demand collectibles are expensive, often unpredictable, and not particularly liquid.

For the average investor, attempting to time the collectible market is a recipe for financial bloodshed.

6. Cash

While most don’t see it as an investment, you’re making a financial decision anytime you choose to do one thing with your assets rather than another. Holding cash, especially in times of high inflation, is like letting a handle full of gold sand slip out of your palm one grain at a time.

When money is steadily (or rapidly) losing its value, seek an investment that can (at least theoretically) keep pace. Cash ain’t that.

7. The Hot Stock You Know Nothing About

Your neighbor or coworker raves about how this stock is single-handedly paying for their new lawn mower or a half-semester of their kid’s college tuition. But what is the company? What, exactly, do they do? And why is the stock ripping like a buzzsaw?

They don’t really know, and that’s your sign to proceed with caution. Repeat after me: Past performance is not indicative of future results. Past performance is not indicative of future results. Past performance…

8. Your Long-Lost Cousin

Just because they’re family doesn’t mean they’re entitled to a loan. Is their plan to open that skydiving business the local market is begging for, or to usurp Chick-fil-A and Popeye’s as the chicken sandwich king (seriously cuz, you have to see this golden batter) promising? No, it’s not.

Nor are the other “investment” opportunities ne’er-do-well family members present to other family members. Blood may be thicker than water, but it’s not thicker than your cousin’s skull. Just say no.

9. Foreign Currency Exchange Trading

Do some people make out like bandits trading foreign currencies? Yes, and their name is George Soros. Are you George Soros? Can you single-handedly crash an economy and reap the financial benefits?

If not, it’s probably wise to steer clear of forex trading.

10. Any Investment That Sustains Unsustainable Returns

You’ve been seeing 15% returns from your independent financial advisor for five years straight, and the friend who referred you to this mysterious investing guru has had similar returns for a decade.

It’s about time you call the guru (what’s his name again? Madoff or something?) and pull your money out. Something is off, and your money may not be safe.

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