Three of the riskiest investments to put your money into

1. Bitcoin

There’s no doubt that bitcoin is exciting. A lot of rich tech entrepreneurs are big fans, and the secrecy behind where it came from creates an undeniable allure. The promise of a decentralized way to pay for things? Such a cool concept.

But for now, bitcoin remains a speculative investment. Certified Financial Planner Robin Hartill says “People invest in it because they think other investors will continue to drive up the price, not because they see value in it.”

That means the price can fluctuate like crazy. It’s peaked at $20,000 and plummeted to below $4,000. It’s incredibly voltalite for no rhyme or reason, making it a very risky investment, so unless you can afford to lose a big chunk of money, it’s best to be avoided.

2. Gold and silver

There’s a reason why the phrase “the gold standard” exists — gold (and silver) are often thought of as hedges against a bear market because they’ve held their value throughout history, says Hartill.

She actually says gold and silver can be a good way to diversify your portfolio, “but anything above 5% to 10% is risky.”

Because of how rare they are (gold especially), they are super volatile. If a new gold mine is found, the price can suddenly drop. Plus, both metals have tended to underperform compared to the S&P 500 in the long term.

And then there’s the whole other risk of storing a bar of gold in your underwear drawer…

3. Collectibles

Do you collect stamps, vintage Coca-Cola signage or shot glasses? A lot of people collect things as a hobby — it’s when they bet on their collections becoming a profitable investment that things turn risky.

Hartill says it’s OK to spend a reasonable amount of money curating a collection if it’s something that brings you joy. “But if your plans are contingent on selling the collection for a profit someday, you’re taking a big risk.”

Why? Well, for one, those assets aren’t liquid. You can’t just bring them to a bank and exchange them for cash. They can be really hard to sell, leaving you with a big investment but no way out.

There’s also no set price for a collectible, since it’s only worth as much as someone wants to pay for it. That means you may have to sell your collection for a steeper discount than you planned, plus you’ll pay 28% in capital gains tax on the profits. To put that in perspective, it’s almost twice the tax a middle-income earner would pay for long-held stocks.

One of the safest ways to invest

It’s no secret the market has its fair shares of ups and downs, especially this past year, but you shouldn’t assume that means it’s a massive risk. While there will always be a risk associated with investment, the stock market historically has about a 7% return year-over-year.

So while the markets are unpredictable, they still tend to go up over time. It’s a long-term strategy to grow your wealth, without buying Beanie Babies and crossing your fingers for someone to pay $5,000 for Patti the Platypus.

If you haven’t started investing and have some money to spare, you can start small. Investing doesn’t require you throwing thousands of dollars at full shares of stocks. In fact, you can get started with as little as $1.*

We like Stash, because it lets you choose from hundreds of stocks and funds to build your own investment portfolio. But it makes it simple by breaking them down into categories based on your personal goals. Want to invest conservatively right now? Totally get it! Want to dip in with moderate or aggressive risk? Do what you feel.

Plus, with Stash, you’re able to invest in fractions of shares, which means you can invest in funds you wouldn’t normally be able to afford.

If you sign up now (it takes two minutes), Stash will give you $5 after you add $5 to your invest account. Subscription plans start at $1 a month.**

*For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

**You’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the custodian.

The Penny Hoarder is a Paid Affiliate/partner of Stash. Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.

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.

About the Author

The Penny Hoarder

The Penny Hoarder

Guest Writer

Founded in 2010, The Penny Hoarder is one of the nation’s largest personal finance websites. Its purpose is to help people take control of their personal finances and make smart money decisions by sharing actionable articles and resources on how to earn, save and manage money.

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