I’m 58 and I’ve saved a lot of money. I think maybe things like index funds are too simple for me. Should I start looking at more sophisticated or complex investments?
I get asked this all the time.
There’s a perception among some folks that you need to “shake things up” once you reach a certain level of savings or investment success.
But that’s a little like changing your golf swing after you’ve just broken the all-time course record.
My experience has been that most complex investment products end up being far more trouble than they’re worth.
That’s because many of the more exotic investments:
Here are 4 “exotic” investments that might look tempting on paper (or be touted as great options by pitchmen on TV), but which I recommend you avoid.
The acronym REIT stands for Real Estate Investment Trust.
Non-traded REITs were originally touted as “safe” and affordable ways to invest in real estate.
For a while, non-traded REITs seemed to be fading, but now I’m seeing them make a comeback.
So, why should you avoid this vehicle?
A structured note with principal protection is a bond combined with a derivative component to give an investor exposure to another asset. It’s advertised as a way to get all the “upside” of the stock market when it’s doing well, while protecting you when the market drops.
What do they say about things that seem too good to be true?
Structured notes are not nearly as “risk-free” as they sound.
Structured notes are so risky that the SEC and FINRA have both issued alerts warning investors about their complexity and deceptiveness.
Cryptocurrency is a digital form of currency that uses “blockchain” technology and can be traded just like stocks. By now, you’ve probably heard of a few different types, such as Bitcoin, Ripple, or Etherium.
Bitcoin grabbed headlines in 2017 when it jumped more than 1,900% to about $20,000 a coin.2
Everyone seemed to be going Bitcoin-crazy, and we’d get questions about it at almost every free retirement workshop we hosted.
But then in the first six months of 2018, the across-the-board values of cryptocurrencies (including Bitcoin) fell by an average of 80%.
In-spite of this, curiosity around cryptocurrencies is again on the rise. In fact, according to Forbes, there are now more than 1,600 different types.
My list of concerns about cryptocurrencies is a long one:
Granted, gold itself isn’t a “complex” investment. It’s a metal that humans have used for thousands of years.
But all too often, gold is pushed on you by using fear-based marketing tactics.
The goal? To manipulate your emotions and convince you that gold is a “must-have” investment, offering protection from stock market declines, rising inflation, and even the collapse of the economy.
Don’t be fooled.
While it’s true that gold can be a hedge during bad economic times, it comes with numerous downsides:
Just because your wealth increases doesn’t mean you should complicate your investment strategy. Some of the most savvy, successful investors I know keep things simple.
If index mutual funds and/or exchange-traded index funds helped get you to where you are today (and it sounds like you’ve done very well for yourself), why change horses mid-stream?
All of us need to be reminded from time-to-time that slow and steady usually wins the race.
No matter what, always make sure you’re working with a full time fiduciary financial advisor.
That’s because he or she is required by law to make recommendations based solely on your best interests – not based on what will make them the most money.
For some other investment products, promises, and financial industry people I recommend you avoid, get a free copy of our “Retiree Beware!” guide today.