Common ‘Investments’ Geared Towards Young Adults that You Need to Avoid

With a tough economy and growing debt from credit cards and student loans, a slew of scumbags and some altogether honest business people are targeting you to get rich fast. Almost all of them are using advanced internet marketing tactics such as social media, product reviews and enticing videos. They all have one thing in common; promise you your own money making fortune for just a small investment to learn their secrets.

Build a Website and Get Tons of Traffic

You’ve seen these videos all over Youtube right? A guy is sitting by the beach with his laptop talking about how warm it is and how he does nothing but make money by the ocean all day. The best part is, he will tell you exactly how he does it. How ridiculous do these ideas sound and how naive do we have to be? The sad truth is, because so many people are in seemingly dire straights the internet marketers do a great job of appealing to the easy laid back nature of these scams. The basic premise is, “you don’t have to know anything and you don’t have to work hard.”

Why it Fails: More often than not these guys are rehashing what is freely available on many internet marketing, social media and SEO blogs. They just package it up into a pretty looking course, newsletter or ebook. Worse, many of them are putting together scams whereby, them teaching you how to get rich online like them is an endless cycle of charges to your credit card through boiler room tactics

Positive Solution: Build your own website using freely available tools with modest expectations. Use a free service like Blogger or WordPress and get excited about blogging about what you enjoy. You will spend no money and eventually will earn yourself some readers and potential for making money on it.

Trade Currencies aka ‘The Wonderful World of Forex’

One of the largest explosions in the financial investing world has been with the forex markets, otherwise known as foreign exchange. Of course, forex has occurred for many years and has been a pivotal strategy for large multinational corporations, banks and even tourists. However investing in it is a little bit new.

Why it Fails: As a result of being far less regulated, arguably unregulated, forex trading is nothing like the security you would see from the stock market. As such, a whole business of newsletters, software and ebooks are marketed at new comers to teach them all of the secrets. Most popular are the forex bots, which will trade currencies for you while you sleep. Another point to keep in mind is that the markets move instantly throughout the day. Forex brokers take advantage of this and pressure you to trade more and more, racking up more commission charges to your account in what is known as the spread.

Positive Solution: Open up a bank account in a foreign currency, or invest in a multinational company’s stock who is based on a foreign currency. For example, if you are living in Canada, you could open a bank account with your bank in American dollars. Or if you were an American investor in stocks you could find a company based in Mexico whose costs, profits and assets are all in Pesos. This gives you foreign currency exposure with a lot less risk, although a different kind of risk altogether.

Collectable Toys and Other Fads

The readers of this blog probably remember Beanie Babies, Pokemon and Furbies were selling on the secondary market for many multiples their retail price. However as the trend fell through so did everyone’s collections. Now we have a hard time giving them away. But a lot of people are arguing the case based on the popularity of ‘reemergence’, such as comic book based movies, Transformers, Star Wars etc.

Why it Fails: Hardly any of these fads provide any real investment quality. They must have a scarcity and they must have a demand. Many of us in our youth stashed baseball cards away in perfect mint condition thinking we were going to get rich 20 years down the road. Guess what? Everyone else did too! If anyone wants a copy there are a thousand available on eBay. That is assuming someone wants them.

Positive Solution: Use the superhero movie rule. Comic books of superheros like Spider-man, Fantastic Four and Batman shot up in value as a result of the new popularity in their movies for two reasons. The first reason is because everyone wanted one. There was a demand. The second reason is because they had scarcity. Unlike Beanie Baby’s, Amazing Spider-Man #1 was not put in a protective sleeve, it was read, thrown around and probably damaged like any other magazine or book. It has scarcity.

There’s More Junk Out There

These are just a few of the many fads, speculations and ‘investments’ people are trying to swindle us in in order to make an extra buck for themselves. Can you think of anymore?

Scott Hopkins is a part time blogger and owner of Youthful Investor, an investing blog focusing on stocks and the strategies involved in researching them. You can follow weekly updates on his blog or add him on Google+.

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