There are many ways to invest, and it’s great – everyone can find a tool they like. However, it is necessary to be careful when choosing, because some of them are more likely to cause headaches than income. Let’s discuss Top bad investment ideas.
Theory of probability against you – you will definitely lose money in the long run. A binary option is an asset that either provides a fixed amount of income (premium) or generates nothing, depending on whether the specified condition is met at the specified time. There are only two options, hence the name. As a rule, the investor gets profit if he guesses whether the price of an asset will go up or down. It is almost impossible to predict the price change, since the investment in binary options is a short-term one. Moreover, the maximum short term – most often, a transaction lasts from a couple of minutes to a day. As we all know, asset prices can fluctuate constantly during the day. And it does not matter that little – binary brokers take into account changes up to the third or fourth digit after zero in the price. If an asset was worth $1.001 and a minute later it was worth $1.002 and you bet on the price increase, congratulations, you won. You bet on the fall – you lost all your investments in this resource.
Investing in binary options is, in fact, a gamble. The trader does not trade with other market participants, but with a “broker-computer”. He has almost no chances to make a profit in the long run and that’s why. The rate of return on successful trades is usually set at 85%, rarely higher, while in the case of a failed trade you lose 100% of your invested funds. That is, if you invested $100 and won, you will get $185, if you lose – $0 and lose everything you invested. Even if the trader wins in half of the trades (and the probability of correctly guessing the direction of the price is close to 50%), he still loses money over time, just because of 85% of returns.
No one has ever become a billionaire, just keeping money in a bank. What can be wrong with this conservative method of investment? Remember the interest that banks offer on deposits. And now remember the inflation rate. We are talking about reliable and well-known banks: most often your income on deposits is if not imaginary, then minimal. Well, if the interest on your deposit is above inflation, then you will at least index your savings. Otherwise, you will simply lose some of your initial investment. I’m not sure that even a beginner investor may be interested in such a course of events.
Bad investment instruments are not the only way to lose your money or, if you are lucky, invest it less efficiently than you would like. Equity investments may also fail to generate tangible returns or even become unprofitable if you choose the wrong company to invest.