10 Risky Investments That Could Make You Lose Everything

If the stock market crashed again, would you respond by investing more? Is day trading your sport of choice? Do you smirk at the idea of keeping money in a savings account instead of investing it?

If you answered yes to these questions, you’re probably an investor with a high risk tolerance.

Hold up, Evel Knievel.

It’s fine to embrace a “no-risk, no-reward” philosophy. But some investments are so high-risk that they aren’t worth the rewards.

10 Risky Investments That Could Lead to Huge Losses

We’re not saying no one should ever consider investing in any of the following. But even if you’re a personal finance daredevil, these investments should give you serious pause.

Sure, if things go well, you’d make money — lots of it. But if things go south, the potential losses are huge. In some cases, you could lose your entire investment.

1. Penny Stocks

There’s usually a good reason penny stocks are so cheap. Often they have zero history of earning a profit. Or they’ve run into trouble and have been delisted by a major stock exchange.

Penny stocks usually trade infrequently, meaning you could have trouble selling your shares if you want to get out. And because the issuing company is small, a single piece of good or bad news can make or break it.

Fraud is also rampant in the penny stock world. One common tactic is the “pump and dump.” Scammers create false hype, often using investing websites and newsletters, to pump up the price. Then they dump their shares on unknowing investors.

2. IPOs

You and I probably aren’t rich or connected enough to invest in an IPO, or initial public offering, at its actual offering price. That’s usually reserved for company insiders and investors with deep pockets.

Instead, we’re more likely to be swayed by the hype that a popular company gets when it goes public and the shares start trading on the stock market. Then, we’re at risk of paying overinflated prices because we think we’re buying the next Amazon.

But don’t assume that a company is profitable just because its CEO is ringing the opening bell on Wall Street. Many companies that go public have yet to make money.

The average first-day returns of a newly public company have consistently been between 10% to 20% since the 1990s, according to a 2019 report by investment firm UBS. But after five years, about 60% of IPOs had negative total returns.

3. Bitcoin

Proponents of bitcoin believe the cryptocurrency will eventually become a widespread way to pay for things. But its usage now as an actual way to pay for things remains extremely limited.

For now, bitcoin remains a speculative investment. People invest in it primarily because they think other investors will continue to drive up the price, not because they see value in it.

All that speculation creates wild price fluctuations. In December 2017, bitcoin peaked at nearly $20,000 per coin, then plummeted in 2018 to well below $4,000. That volatility makes bitcoin useless as a currency, as Bankrate’s James Royal writes.

Unless you can afford to part ways with a huge percentage of your investment, bitcoin is best avoided.

4. Anything You Buy on Margin

Margining gives you more money to invest, which sounds like a win. You borrow money from your broker using the stocks you own as collateral. Of course, you have to pay your broker back, plus interest.

If it goes well, you amplify your returns. But when margining goes badly, it can end really, really badly.

Suppose you buy $5,000 of stock and it drops 50%. Normally, you’d lose $2,500.

But if you’d put down $2,500 of your own money to buy the stock and used margin for the other 50%? You’d be left with $0 because you’d have to use the remaining $2,500 to pay back your broker.

That 50% drop has wiped out 100% of your investment — and that’s before we account for interest.

5. Leveraged ETFs

Buying a leveraged ETF is like margaining on steroids.

Like regular exchange-traded funds, or ETFs, leveraged ETFs give you a bundle of investments designed to mirror a stock index. But leveraged ETFs seek to earn two or three times the benchmark index by using a bunch of complicated financing maneuvers that give you greater exposure.

Essentially, a leveraged ETF that aims for twice the benchmark index’s returns (known as a 2x leveraged ETF) is letting you invest $2 for every $1 you’ve actually invested.

We won’t bore you with the nitty-gritty, but the risk here is similar to buying stocks on margin: It can lead to big profits but it can also magnify your losses.

But here’s what’s especially tricky about leveraged ETFs: They’re required to rebalance every day to reflect the makeup of the underlying index. That means you can’t sit back and enjoy the long-haul growth. Every day, you’re essentially investing in a different product.

For this reason, leveraged ETFs are only appropriate for day traders — specifically, day traders with very deep pockets who can stomach huge losses.

6. Collectibles

A lot of people collect cars, stamps, art, even Pokemon cards as a hobby. But some collectors hope their hobby will turn into a profitable investment.

It’s OK to spend a reasonable amount of money curating that collection if you enjoy it. But if your plans are contingent on selling the collection for a profit someday, you’re taking a big risk.

Collectibles are illiquid assets. That’s a jargony way of saying they’re often hard to sell.

If you need to cash out, you may not be able to find a buyer. Or you may need to sell at a steep discount. It’s also hard to figure out the actual value of collectibles. After all, there’s no New York Stock Exchange for Pokemon cards. And if you do sell, you’ll pay 28% tax on the gains. Stocks held long-term, on the other hand, are taxed at 15% for most middle-income earners.

Plus, there’s also the risk of losing your entire investment if your collection is physically destroyed.

7. Junk Bonds

If you have a low credit score, you’ll pay a high interest rate when you borrow money because banks think there’s a good chance you won’t pay them back. With corporations, it works the same way.

Companies issue bonds when they need to take on debt. The higher their risk of defaulting, the more interest they pay to those who invest in bonds. Junk bonds are the riskiest of bonds.

If you own bonds in a company that ends up declaring bankruptcy, you could lose your entire investment. Secured creditors — the ones whose claim is backed by actual property, like a bank that holds a mortgage — get paid back 100% in bankruptcy court before bondholders get anything.

8. Shares of a Bankrupt Company

Bondholders may be left empty-handed when a corporation declares bankruptcy. But guess who’s dead last in terms of priority for who gets paid? Common shareholders.

Secured creditors, bondholders and owners of preferred stock (it’s kind of like a stock/bond hybrid) all get paid in full before shareholders get a dime.

Typically when a company files for bankruptcy, its stock prices crash. Yet recently, eager investors have flocked in to buy those ultracheap shares and temporarily driven up the prices. (Ahem, ahem: Hertz.)

That post-bankruptcy filing surge is usually a temporary case of FOMO. Remember: The likelihood that those shares will eventually be worth $0 is high.

You may be planning on turning a quick profit during the run-up, but the spike in share prices is usually short-lived. If you don’t get the timing exactly right here, you could lose big when the uptick reverses.

9. Gold and Silver

If you’re worried about the stock market or high inflation, you may be tempted to invest in gold or silver.

Both precious metals are often thought of as hedges against a bear market because they’ve held their value throughout history. Plus in uncertain times, many investors seek out tangible assets, i.e., stuff you can touch.

Having a small amount invested in gold and silver can help you diversify your portfolio. But anything above 5% to 10% is risky.

Both gold and silver are highly volatile. Gold is much rarer, so discovery of a new source can bring down its price. Silver is even more volatile than gold because the value of its supply is much smaller. That means small price changes have a bigger impact. Both metals tend to underperform the S&P 500 in the long term.

The riskiest way to invest in gold and silver is by buying the physical metals because they’re difficult to store and sell. A less risky way to invest is by purchasing a gold or silver ETF that contains a variety of assets, such as mining company stocks and physical metals.

10. Options Trading

Options give you the right to buy or sell a stock at a certain price before a certain date. The right to buy is a call. You buy a call when you think a stock price will rise. The right to sell is a put. You buy a put when you think a stock price will drop.

What makes options trading unique is that there’s one clear winner and one clear loser. With most investments, you can sell for a profit to an investor who also goes on to sell at a profit. Hypothetically, this can continue forever.

But suppose you buy a call or a put. If your bet was correct, you exercise the option. You get to buy a winning stock at a bargain price, or you get to offload a tanking stock at a premium price. If you lose, you’re out the entire amount you paid for the option.

Options trading gets even riskier, though, when you’re the one selling the call or put. When you win, you pocket the entire amount you were paid.

But if you end up on the losing side: You could have to pay that high price for the stock that just crashed or sell a soaring stock at a deep discount.

FROM THE INVESTMENT FORUM
Investing
6/10/20 @ 6:48 PM
Elite Four47
Question- equity for work
12/29/20 @ 2:51 PM
bob G
Home Repair
9/28/20 @ 3:53 PM
Keron X Willis
See more in Investment or ask a money question

What Are the Signs That an Investment Is Too Risky?

The 10 things we just described certainly aren’t the only risky investments out there. So let’s review some common themes. Consider any of these traits a red flag when you’re making an investment decision.

  • They’re confusing. Are you perplexed by bitcoin and options trading? So is pretty much everyone else.If you don’t understand how something works, it’s a sign you shouldn’t invest in it.
  • They’re volatile. Dramatic price swings may be exciting compared with the tried-and-true approach of investing across the stock market. But investing is downright dangerous when everything hinges on getting the timing just right.
  • The price is way too low. Just because an investment is cheap doesn’t mean it’s a good value.
  • The price is way too high. Before you invest in the latest hype, ask yourself if the investment actually delivers value. Or are the high prices based on speculation?

The bottom line: If you can afford to put a small amount of money in high-risk investments just for the thrill of it, fine — as long as you can deal with losing it all.

Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to DearPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

These Free TV Apps Will Let You Cut Cable but Keep Content

Try these free TV apps out and see which works best for you.
Owned by Amazon, IMDb TV (formerly Freedive) features a host of full episodes of your favorite current and classic TV shows as well as an array of movies.
While there are ways to download YouTube content for offline viewing, proceed with caution: Many of these sites and apps are full of malware.
The kids (or kids at heart) can check out Nickelodeon classics like “The Fairly Odd Parents” and “Dora the Explorer.”
Since the service is ad-supported, you can expect to watch a couple minutes of ads every 10 minutes or so. The experience is pretty similar to watching normal television.

12 Free TV Apps That Will Help You Cut Cable

NBCUniversal launched this streaming service, which includes over 7,500 hours of free content, in July 2020.
Chris Brantner is a contributor to The Penny Hoarder. Senior writer Nicole Dow contributed to this article.

1. Crackle

And you aren’t confined to squinting at your phone’s screen or gathering the family around the old iPad to watch your favorite TV series and movies — you can download apps to your Smart TV or even your Xbox or PlayStation consoles.
If you’re a fan of shows like “The Office,” “Law and Order: SVU,” or “Saturday Night Live,” you can watch them on this streaming service.

2. Tubi TV

The library is solid and has started offering popular Fox TV series like “The Masked Singer” and “Gordon Ramsay’s 24 Hours to Hell and Back.”
Whether you want it now or later, Xumo offers live TV and on-demand options.
The catalogue includes some binge-worthy sci-fi hits like “Lost” and “Fringe.”
You’re there anyway — why not get paid to play video games? Here are four simple ways to start earning real cash for virtual play.

3. Pluto TV

Almost all of the networks and cable TV channels have their own free apps for you to download — although many charge you to actually watch current content.

Users can then select which news segments they want to watch from categories like sports, weather or entertainment. NewsON is compatible with iOS and Android phones and tablets, as well as Roku and Amazon Fire TV.
Luckily, there are more options than ever for replacing your traditional cable setup. Many free streaming services have stepped up to offer access to content overlooked by subscription-based services.
The Crunchyroll app is supported by Apple, Android and Windows mobile devices, as well as by gaming consoles, Chromecast, Apple TV and Roku.

Pro Tip
You can even tap the “Live TV” button to watch what’s currently airing on your local PBS station.

Customers can stream Peacock on a variety of platforms, including LG Smart TVs, Vizio SmartCast TVs, Roku, Google and Apple devices and Playstation and Xbox consoles.
Both live TV and on-demand news broadcasts can be streamed from over 275 local news affiliates in 160 markets. The broadcasts are available for up to 48 hours after they air, so even if you don’t catch the news as it happens, you can catch up later.
Xumo is available on most smart TVs and Roku and for download on iOS and Android devices.

4. NewsON

Crunchyroll is a great app for anyone with an interest in anime. Of course, when it comes to anime content, you have to be watchful with your younger children, as a lot of it is geared toward teens (and sometimes even adults).
Twitch hosts user-created channels and streams focused on video games and other esports. It features a built-in chat feature, so users can chat with other streamers in real time.
Got a library card? You have access to even more entertainment options (besides the obvious, books). Check out these library apps for free access to movies, TV shows and more.

FROM THE SAVE MONEY FORUM

5. Funny Or Die

Source: thepennyhoarder.com

Pro Tip
Content on the app must be streamed and cannot be downloaded.

Tubi TV’s library is updated regularly, and the service claims to add new content every week. The Tubi TV app works on more than 25 devices, including Android and iOS, Roku, Apple TV, Xbox, Samsung Smart TVs and Amazon Fire TV.

6. PBS Kids

Yes, YouTube. YouTube apps are compatible with just about every device that has a screen, and the service features videos to choose from on nearly any topic imaginable.
Streaming video isn’t always just about entertainment. The NewsON app provides hundreds of local and national news streams.

Pro Tip
There is a paid premium feature, but the free Crunchyroll service has thousands of hours of popular series like the “Dragon Ball” franchise, “Attack on Titan,” “Naruto” and “One Piece.”

For a free streaming service, Crackle’s library is truly impressive. Crackle even has a handful of original series to its name. Best of all, Crackle works on nearly all mobile devices, streaming boxes and smart TVs.

7. Xumo

In 2018, the Funny Or Die began publishing on Vox Media’s Chorus and now uses the YouTube Player.
While there are thousands of free streams, Twitch also features premium features for a monthly subscription. Twitch apps are compatible with PCs, iOS and Android devices, game consoles, Chromecast and Fire TV.
Or if you just want to veg out, switch over to their Binge menu for a seemingly endless stream of TV series, like “The Hills” and “Mystery Science Theater 3000.”
But it also includes more than 160 free channels, including themed ones in case you’re in the mood for action movies or comedies — you can watch the Funny Or Die channel here, too.

Pro Tip
Sure, there are the usual big names in streaming services available for a monthly fee, but it’s possible to kick subscription fees entirely.

8. Crunchyroll

Like Pluto, you can choose from an assortment of major network news channels that are live streaming.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
A division of FOX Entertainment, Tubi TV has deals with major studios like Paramount Pictures, Metro-Goldwyn-Mayer (MGM) and Lionsgate. It also features lots of foreign and independent productions.
Most of those videos are not exactly premium content, but there are still plenty of full-length films, documentary series and curated channels that provide cost-free entertainment for the whole family.

9. Twitch

One of the go-to names not just in free streaming but in streaming video in general is Crackle. The cost-free service has a variety of content, ranging from classic TV shows like “Bewitched” and “Barney Miller,” as well as the newer “Snatch” series. It also has hundreds of films from major studios.
Many of the free TV apps offer “premium” channels — if you see that word, expect to pay for those services.

Pro Tip
While Twitch is popular with children, parents should beware: Twitch streams are somewhat unregulated and can sometimes contain adult language or content.

The free version of IMDbTV is ad-supported, so you’ll have to sit through a few commercial breaks.
Videos from many of PBS’s most popular series are available for streaming including “Curious George,” “Wild Kratts” and “Sesame Street.” The PBS Kids app is supported for Android, Windows and iOS phones and tablets.

10. IMDb TV

Pluto TV offers TV channels of linear content much like a cable package
Like Tubi TV, Pluto TV has advertisements similar to the ad load of normal TV.
As cable subscription prices rise higher and higher and customer satisfaction ratings dive lower and lower, cutting the cable has never been more popular.
With so many free streaming options out there, it’s easier than ever to cut the cord and save big. Whether you’re looking to keep up with the news, find a good movie for date night or entertain your kids with educational content, a streaming service exists to ensure you can do so without paying a dime.

11. YouTube

For anyone with even a passing interest in gaming and esports, Twitch is the go-to free streaming service.
The go-to streaming app for comedy programming is Funny or Die. Founded in 2007 by contemporary comedy giants Will Ferrell and Adam McKay, it has since grown to be a full-blown production house featuring original content from big names in show business.
Although Peacock offers paid premium options, the free version includes current and classic TV shows, movies, news, sports, kids’ shows, Spanish-language programs and even select episodes of Peacock originals.

12. Peacock

Kids need free streaming content, too. PBS has a PBS Kids Video app that provides hundreds of hours of educational and enriching content for the youngest members of the family. The app has a colorful, child-friendly interface, which makes it easy for kids to take control themselves.
Pluto TV boasts a large list of supported devices including iOS and Android devices, Amazon Fire TV, Roku, Apple TVand Chromecast devices and Android TV.
It is available in the United States on the IMDb app, the IMDb website, the Amazon Prime Video app and Amazon Fire TV devices.
Of course, there are some rather shady options out there that stream pirated content. But we’ve rounded up free, legal streaming apps that provide no-strings-attached cable-cutting solutions.

Get camera-ready: From masterclasses to gear, The Penny Hoarder Shop has all things photography.

There are dozens of classic TV, movie and sports channels — and even some highly curated streams of niche content.
If you’re looking for breaking news, you can choose from an assortment of major network news channels that are live streaming.
Anime and manga fans are likely already familiar with Crunchyroll. It specializes in mostly Japanese content, but it also features films and series from all over the world. Crunchyroll boasts a library of thousands of anime films and series, many of which are hard to find on other streaming services.