100 best money moves
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Why they tempt you: They yield 6% on average - and your broker is pushing them.
Why to resist: You typically pay a sales fee of 12% or more and lock in our money for a decade. Because it can take a few years to pool money and buy property, dividend payouts may be deducted from your contributions, eroding your return. "Most investors will only manage to break even, if that," says Malcolm Gissen, a financial adviser in San Francisco.
Do this instead: Stick to a REIT (average yield: 4.2%) that is publicly traded.
Long-call options
Why they tempt you: This is an easy way to play options, which are all the rage.
Why to resist: With a long-call option you are placing a bet that a particular stock or index will rise, and what the magnitude and speed of the run-up will be. "It's not a very easy strategy to make money on," says Randy Frederick, director of trading and derivatives at Schwab.
Do this instead: Sell a covered call on a stock you own to earn extra income. Downside: You'll have to give up the stock if it rises to a pre-set price before the option expires.
Leveraged inverse ETFs
Why they tempt you: They let you do short-term hedging against portfolio losses.
Why to resist: These wildly complex funds allow you to bet against the direction of stock and bond prices using derivatives and debt. Fort buy-and-hold investors, the gains are typically nominal, but the potential losses are huge. "Who can predict when precisely to hedge?" asks asset manager William Bernstein. "These are like little bombs inside a portfolio."
Do this instead: Reduce overall losses the old-fashioned way: by properly diversifying.
NEXT: Move 93: Do good with these funds
