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Worst Investments
By JD Bluefield | March 17, 2008
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Everyone talks about the best ways to invest money, but what about where NOT to put your money. Here are some investments you should NEVER invest in and for that matter avoid like H5N1 (a.k.a. Avian flu/bird flu).
- Timeshares: No matter what they tell you or how they spin the numbers, it is a terrible idea. You’re basically signing a contract to pay $x,xxx amount of dollars, every year, to stay at one of Company XYZ’s hotels, at the rate they decide, for the rest of your life. Typically there is no way to sell your shares to come out ahead.
- Pyramid Schemes: There are a many legal and illegal companies which operate as pyramids (aka, MLM or Multi-Level Marketing, Network Marketing, etc.). The basic premise starts with you selling XYZ products to your family and friends, they join under you and you collect a commission of their sales. The allure of collecting a commission from all of the people below you in the pyramid, hence the name, draws you further in. The truth is that you’ll most likely sell a handful of lifetime guaranteed plastic containers. Then you’ll quickly lose interest when you realize that the friend who signed you up has been doing this for 5 years and is no closer to an early retirement.
- Gambling: Cards, sports, dice and the lottery are all sucker bets. I consider the lottery worst of all because it is hypocritically run by the state. Over a long enough period, the house always wins! Question: Could they produce the lavish hotels on the strip if people were winning?
- Jewelry/Diamonds: Jewelry, although valuable, is not an “investment”. Although made primarily of precious metals and gems, it is usually marked-up far beyond its intrinsic melt value. Which is usually the most that any pawn shop will offer you. I hate to break this to you girls, but contrary to what the diamond industry wants you to believe… diamonds are are not rare at all. Diamond prices are kept at artificially inflated levels by the DeBeers Cartel, similar to the way oil is controlled by OPEC. Industrial-grade diamonds have been synthetically produced since the 1970’s, and recent advances have now made near-perfect gem-quality diamonds a reality. See this very interesting article in Wired Magazine. If you want to invest in a rare precious resource/commodity for the purpose of storing wealth it needs to be in a recognized, standardized, universally accepted form that is also easily liquidated. If physical precious metals is what you’re looking for than gold/silver coins are a much better form to hold.
- Complexity: Anything you don’t fully understand should not be invested in.
Topics: Gold/Silver/Metals, Investing, Personal Finance |
2 Responses to “Worst Investments”
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March 18th, 2008 at 1:13 am
Jewelry and diamonds may not be bad investments as history will show that they are a good store of value and are liquid. A good case would be the Jews of Nazi Germany. Many jews used gold jewelry and diamonds to buy their freedom as well as a means of transporting their wealth. After all isn’t saving a life a good investment.
I can agree with the rest.
March 18th, 2008 at 2:33 pm
Greenmeadow, that is a very good case in which precious commodities were great to have on hand, but that’s more of an investment in security/self-preservation than financial gain. Eitherway, if I’m spending my money I’ll take a couple 24kt gold coins marked up 5-10% over spot POG, than a 14kt necklace marked up 100-300%. Further more, pass me a handful of identical, untraceable, perfect in ever aspect lab created diamonds at half the price of naturals.