EVEN BAD FINANCIAL products and strategies turn out okay for some investors. If that wasn’t the case, they probably wouldn’t attract enough customers to survive, no matter how aggressively they’re peddled. Still, some are so risky or so costly that the chances of a happy outcome are slim. Want to improve your odds of financial success? Here’s how I would categorize the products and strategies on offer today:
Dangerous
Buying stocks on margin
Leveraged exchange-traded index funds
Day trading
Short selling
Writing naked call options
Dubious
Cash value life insurance
Variable annuities
Equity-indexed annuities
Hedge funds
Market timing
Options trading
Technical analysis
Structured products
Load funds
Unit investment trusts
Closed-end funds bought at the initial public offering
Non-traded REITs
Brokers on commission
Carrying a credit card balance
Proceed with Caution
Actively managed funds
Individual stocks
Bonds bought in the secondary market
Closed-end funds at a discount
Rental properties
Vacation homes
Interest-only mortgages
Reverse mortgages
Long-term-care insurance
Claiming Social Security early
Promising
Index mutual funds
Exchange-traded index funds
High-yield savings accounts
Certificates of deposit
Treasury bonds
401(k) plans
IRAs
Health savings accounts
Term life insurance
Rewards credit cards
Owning your primary residence
Conventional mortgages
Home-equity lines of credit
Immediate fixed annuities
Deferred income annuities
Claiming Social Security late
The bottom line: With so many products in the promising category, why risk owning anything else?
Want to receive our weekly newsletter? Sign up now. How about our daily alert about the site's latest posts? Join the list.
Free Newsletter
Arrives weekly.