Here are 5 assets that smart rich retirees never buy, while poor ones often do. Do you own any of them?

Warren Buffett recommends a straightforward index fund for most people. While billionaires like him are investing in safe and somewhat mundane assets, they’re also avoiding assets that are obvious money pits.

Unfortunately, many novice investors fall into these traps because the sales pitch is too good to resist.

Here are five investment products popular with novice investors that the experts tend to avoid.

1. Timeshares

Timeshares have a deceptively simple pitch: access luxury real estate for a fraction of the price.

However, in reality, the resale value and maintenance fees associated with timeshare deals erode any of its advantages.

Maintenance fees are due every year or every quarter, depending on your agreement, and the costs can quickly stack up. The average maintenance fee per interval was $1,480 in 2024, according to ARDA’s 2025 industry study (1), which represents an increase of 36% over four years.

Meanwhile, resale value can quickly plummet after you sign the agreement. In a recent interview, Brian Rogers of the Timeshare Users Group said (2) these assets “almost universally lose 90% to 100% of their retail purchase value the instant they are bought.”

These are enough reasons to avoid investing in timeshares.

2. High-fee annuity

An annuity can be a useful tool for retirement. But some of these instruments are structured in complex and expensive ways that diminish their value.

For instance, the Financial Industry Regulatory Authority (FINRA) warns consumers that some annuities may have hidden fees, including surrender charges, administrative fees and underlying fund expenses that can reduce the value you ultimately receive.

According to CBS News, some of these fees can start as high as 7% or 10%. (3) High expenses make for bad investments. You can either avoid annuities altogether or look for a relatively cheap annuity without any of these hidden fees in the contract.

3. Vacation homes

Owning a beach house in Florida sounds like something a rich person would do. But, in reality, owning homes just for vacations is often a bad investment.

The hidden costs of owning a typical property, from insurance to property taxes, can be roughly $14,000 a year, according to Zillow. (4) And that doesn’t include the costs of servicing a mortgage, which can also be significant.

Tighter regulations and increased competition have also made short-term rentals less lucrative, according to Mansion Global. (5)

Put simply, the costs of maintaining a vacation home could outweigh the benefits of using the property during holidays and renting it out during the rest of the year. Booking a hotel might be the smarter choice for holidays.

4. Exotic ETFs

Exotic exchange-traded funds (ETFs), such as option-based ETFs and leveraged ETFs, sound like a good deal on paper. But these products have hidden risks that you should be aware of.