What investment types to avoid?

by Team Dinks on May 11, 2014 · 0 comments

There are many forms of legitimate ways to invest money. However there are also some that you should avoid which can be highly dangerous to your wallet.

Due to popular demand, in this article I’m going to outline a few investment types that I believe are not suited for people for various reasons.

Forex trading

Forex trading is trading on the future change in the exchange rate of various assets. The goal is to buy today a certain amount of foreign currency and then later sell it when the exchange rate is higher in order to make profits.

So far so good, however the problem is that it’s extremely difficult to accurately predict how currency exchange rates are going to develop in the future.

Imagine the following scenario:

You buy 800 Euros today for $1,000. After this, you will hope that in the future you will be able to sell your euros to make more than $1,000. This is definitely possible however it mainly depends on luck and chance.

Unless you are an experienced financial professional, you will have an extremely hard time predicting the movement of various assets. Most of the time you will have to rely on pure luck and guessing.

Binary options trading

Binary options are the latest trend in the online trading business. However, like forex, this form of trading is also dangerous. In fact, I believe it’s actually several times more dangerous than forex.

It works the following way:

You believe that the stock price of company X will increase within the next 24 hours. In this case, you invest a certain amount of money into this “option”. If you are right, you will get your investment back plus commissions that can rage from 60% to something like 95% of the original investment.

However, if your prediction was wrong, you will lose all the money invested and you will not have the possibility to get anything back. For this reason I actually think that binary options are in fact not even investment but more like gambling.

Like in the case of forex, you will have an extremely hard time to predict how the assets will move in the future. Virtually all will depend on luck and chance and you will have little control over the entire process.

Binary options as well as forex brokers are expanding at a very high rate on the web, especially in the United States. There are even websites that are specialized on recommending US citizens the right brokers.

However, remember, no matter what’s being claimed, both forex and options are more related to betting and gambling than to real investing.

Conclusion: Stay away from these forms of investing and trading if you want to keep your money. In my opinion there is nothing necessarily wrong with both of these trading types, but only if you fully understand the dangers you are exposed to. At no moment should you believe that forex or options are a quick way to financial success.

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