MEPX
Chapter 9 of 10All chapters
  1. 1Why invest at all
  2. 2Asset types
  3. 3Risk
  4. 4Diversification
  5. 5Costs and tax
  6. 6Time and compounding
  7. 7Behaviour
  8. 8How markets behave
  9. 9Products and pitfalls
  10. 10A sane starting point

Chapter 9 of 10

Products and pitfalls

What to be careful with.

Complexity as a warning

Structured products, leveraged funds and anything requiring a diagram usually transfer risk to you and fees to someone else. Complexity favours the seller.

  • Leverage multiplies losses as well as gains, and forced selling ends positions early.
  • Illiquid investments cannot be exited when you want to.

Fraud

Guaranteed returns, pressure to act now, unregistered sellers and difficulty withdrawing are the classic signs. Check the regulator's register before sending anyone money.