Retirement Money Pits

Investing for retirement is an incredibly important thing. We always want to make sure that we have enough money to survive without having to find work in our golden years. That’s why so many retirees get sucked into retirement money pits. Today, we’ll talk about five retirement money pits savvy individuals should navigate carefully.

#1: Short-Term Trading – Specifically Forex and Binary Options

Some investors wonder if they should invest in forex or binary options to pad their retirement. I understand why they ask. After all, these can be highly profitable short-term trades. However, it should be understood that with the potential for massive profits comes massive risks.

If you want to try your hand at one of these high risk trading vehicles, and you have extra money to lose, sure, take your chances. However, when it comes to your retirement, the money you are going to depend on, don’t take the risks associated with these trading vehicle. This is especially true for binary options which is fraught with scammers.

#2: Investing In Precious Metals

I’ve talked to quite a few people who have said that they are thinking of investing in precious metals, citing the old adage that these are safe haven assets. However, the truth is not so clear cut. While Gold and Silver and such metals are indeed good investments in times of market downturns they can lose their worth fast once markets pick-up.

In the short-term investing in precious metal can be very profitable and they can be used to top off your retirement pot – but it’s all about timing and you need to get in and get-out at the right time. You should give considerable thought to investing in precious metals as part of a long-term goal. At the end of the day precious metals can be volatile assets and should be approached with caution.

#3: Penny Stocks

Another question oft asked is, “Should I sink some money in promising penny stocks?” No doubt that Penny stocks are cheap … by definition, they are under $1 per share.

However, it’s important to remember that penny stocks are in that category for a reason. In most cases, the businesses either don’t have a product quite yet or have a product that has failed. While there’s plenty of money to be made in penny stocks, they come with incredibly high risks. Once again, your hard earned retirement dollars are better invested without high risk.

#4: Annuities

I can’t tell you how many times I’ve seen people roll investment accounts into annuities at the first sign of declines. Unfortunately, these people tend to lose quite a bit of money. The reason they do this is that they figure they can earn a steady market rate on their investments without the risk of declines. However, cashing out low means that you have accepted the losses. When market conditions pick up and your retirement investments would have been working hard for you, they will be stuck in annuities that offer lower rates of return. At the end of the day there are a lot of pros and cons and rolling your retirements into other safe havens may be a good idea, but annuities usually lead to lower gains in the long run.

#5: Active Trading

When investing for retirement, it’s a good idea to make your investments in lower risk assets and let your money sit. From there, your money will work for you. However, active trading is becoming more and more popular.

Don’t get me wrong, active trading can be a great way to make money. However, any form of active trading is going to come with a much higher level of risk than long-term investment strategies. When we’re talking about retirement, the best thing you can do is measure risk and reward, putting a heavy emphasis on risk. Ultimately, you want to minimize risk at all costs.

What Do You Think?

Based on your experience, what types of investments or investment strategies are best avoided?

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.


  1. And there’s so many other ways to lose money from your retirement fund than the ones you’ve outlined, James. But I agree, these are probably the most common. What have we all learnt here? Invest wisely in index funds, property (if you can), and perhaps a few long-term shares.

    At the end of the day, do your research, learn how each investment type works and make sensible, considered choices where you put your stash. It may have to last you a long, long time. Nice post James.

    • “Invest wisely in index funds, property (if you can), and perhaps a few long-term shares.” Well stated, my friend. I often tell people they will find great success simply by investing in low-cost index funds; and investing early and consistently as possible. Time and compound interest are tremendous allies.

      Thanks for stopping by and sharing your thoughts, my friend.

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