5 Riskiest Investments for Beginners

We have heard of stories about people investing and getting rich. As a result, many are encouraged to dive into the world of investing and start earning lots of money with minimal work. But before trying anything, you have to understand first that investments can be risky, especially for beginners. Investing in something that you don’t really understand can make you lose everything you have.

Gas and oil exploration and drilling

Investing in gas and oil has become profitable for thousands of people for several decades. But you have to know that investing in an exploration and drilling project is risky. There is no assurance that this will yield a positive result. There is a possibility that after years of expensive exploration, there is no oil or gas to drill. With this, you must be ready to lose all the money you invested.

Alternative investments

This type of investment includes artwork, collectibles, royalty interests, or hedge funds. They are appealing to investors looking for an opportunity that is new and unsaturated. One problem with these types of investments is that the market is too unpredictable. They can lose their value overnight. 

Alternative investments are only meant for investors who have years of experience and have a deep understanding of the market. For beginners, putting your money here can be a huge risk, something that could lose you your entire life savings.

Emerging markets

Emerging markets are found in countries that are on their way to having a developed economy. They were usually referred to as less economically developed countries. Investing in companies in these emerging markets can be profitable when the country’s economy is further developed.

However, there are many risks involved that can happen at any time. For example, political risks when governments change policies that can affect businesses, or when political unrest happens in a country.

Futures on the stock market

Investing in futures contracts means betting on the future of the stock market. Here, you put your money based on informed guesses, speculations, and hunches. In a way, investing here is a gamble. 

Futures is better for investors who have a better grasp of the stock market. You should have years, if not decades, of experience in order to properly make your bets. Also, you should be prepared to lose all your investments because an unforeseen event can disrupt the entire stock market, which can mean losing in futures contracts.

Limited partnerships

Limited partnerships happen when two or more parties enter into a business relationship, with general and limited partner roles. General partners manage the business and incur unlimited liability, whereas limited partners only have liabilities that amount to their investments.

Investing in a limited partnership is riskiest when done in private trades. Especially for general partners, every partner is liable for all the transactions done in the business. Before investing in a limited partnership, make sure that you know the roles and responsibilities, whether you will be a general or a limited partner. Also, ensure that your partners are trusted and responsible.