Investment analysts caution against certain retirement investments that are often too cautious or too ambitious and do little to earn much-needed funds.
Here are four of the least popular investments for retirees.
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1. Hoarding Cash
Parking thousands of dollars in a
bank account is a rookie mistake, according to Forbes. One study found that about 25 percent of Americans do this with their money, keeping that nest egg from earning.
“If you’re earning 1 percent on your money in a savings account, you’re arguably losing purchasing power every year due to inflation," certified financial planner David Blaylock of Fort Worth, Texas, told Forbes. "Growth isn’t even a possibility.”
2. Buying Penny Stocks
Stocks under $5 a share are described as "penny stocks." They are also sometimes called "micro-stocks." While they may seem affordable because of their costs,
they are higher risk, Investopedia warns. Very little information and history will typically exist for this type of stock. Many offer low liquidity, making them hard to get rid of.
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3. Owning Physical Gold
Experts urge
caution when buying gold, according to Bankrate. Gold can be a decent part of a thoughtful portfolio, but purchasing large amounts of physical gold, whether in coins or bullion is perhaps less responsible than late-night infomercials allow. Gold, while considered a hedge against inflation, tends to move against the dollar. When the dollar's value is low, gold prices are high.
4. Investing in Start-Ups
Venture capitalism sounds hip, but is often a wasteful strategy for investors. Doing proper
research into a new company's finances is crucial, Entrepreneur reported. Such investing, Entrepreneur warns, "offers no guarantee you’ll make a profit or even get your money back, so pay attention to the warning signs of predictable startup failure. Obtain the necessary documents and consult with a financial analyst if you have the time. Otherwise, stick with more established companies and avoid the 80 percent failure rate."
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