There are many different types of stock investments available, but not all of them are created equal says Samir H Bhatt. In fact, there are several types of stock investments you should avoid altogether.
Here are 23 of them:
1. Penny stocks:
These are stocks that trade for less than $5 per share. They’re incredibly risky and often have little to no value.
2. Junk bonds:
These are bonds that have a credit rating of BB or lower. They’re very risky and tend to have high-interest rates.
Initial public offerings can be very risky, especially if the company is unproven or has a lot of debt.
4. Out-of-the-money options:
Options that are out-of-the-money are very risky because they have a high chance of expiring worthless.
5. Over-the-counter stocks:
These are stocks that don’t trade on an exchange. They’re often much less liquid and can be very risky.
6. Microcap stocks:
Microcap stocks are stocks that trade for less than $300 million. They’re incredibly risky and often have little to no value.
7. Emerging markets stocks:
Emerging markets stocks can be very risky, especially if you’re not familiar with the country’s economy.
8. Crowd funded startups:
Crowd funded startups are often very risky, since most of them fail within the first few years.
9. Debt-laden companies:
Companies that are heavily in debt are often risky, since they may not be able to repay their debts.
10. Companies with poor management:
Companies with poor management are often risky, since they may not be able to make smart decisions about their business explains Samir H Bhatt.
11. Penny auctions:
Penny auctions can be very risky, since there’s no guarantee you’ll actually get the product you’re bidding on.
12. Gambling websites:
Gambling websites can be incredibly risky, since the odds are always stacked against you.
13. Ponzi schemes:
Ponzi schemes are incredibly risky and often end in disaster for the investors involved.
14. Get-rich-quick schemes:
Get-rich-quick schemes are always risky and usually don’t work as advertised.
15. Cloud mining:
Cloud mining is often very risky; since there’s no guarantee you’ll actually receive the bitcoins you’re promised.
16. Binary options:
Binary options are incredibly risky and often end in losses for the investor.
Cryptocurrencies are incredibly volatile and can be very risky to invest in.
18. Unsecured loans:
Unsecured loans are often very risky, since there’s no collateral to back them up.
Pawnshops can be a risky place to invest your money, since you may not get back what you loaned them says Samir H Bhatt.
20. Precious metals:
Precious metals can be a risky investment, especially if the market crashes.
Art can be a risky investment since it’s not always easy to sell and the market can be volatile.
22. Beanie Babies:
Beanie Babies are often seen as a risky investment since their value often decreases over time.
23. Lottery tickets:
Lottery tickets are the riskiest type of investment there is, since your odds of winning are incredibly low.
Be sure to avoid these types of stock investments if you want to minimize your risk. There are plenty of other options available that are much less risky.
Q: Why are penny stocks so risky?
A: Penny stocks are risky because they’re often not worth very much money. They also have a high chance of expiring worthless according to Samir H Bhatt.
Q: Why are junk bonds so risky?
A: Junk bonds are risky because they have a credit rating of BB or lower. This means that they’re more likely to default on their debt.
Q: What is an IPO?
A: An IPO is a company’s first time going public. This can be very risky, since the company may not be well-established yet.
Q: What is an out-of-the-money option?
A: An out-of-the-money option is an option that has a low chance of being profitable. This is because it’s traded at a price that’s higher than the current market value.
Q: What is a microcap stock?
A: A microcap stock is a stock that’s worth less than $300 million. These stocks are often very risky and have little to no value.
Investing in stocks can be a great way to make money, but it’s important to choose your investments wisely says Samir H Bhatt. Be sure to avoid the types of stocks listed above if you want to minimize your risk. There are plenty of other options available that are much less risky.