Five Dumb Ways to Lose Your Money

Feeling overly rich? Thought so. So here are five ways you can quickly change that.

1. Switching loaded annuities.
If you buy a loaded annuity from a commissioned sales person they often have big upfront commissions. The best way to really lose money is to get someone to switch you into a different loaded annuity from a different company. You’ll pay that big fee all over again. It’s possible to have that cost you 12% of your investment each time you switch.

2. Frequent trading with a full price broker.
Frequent trading can really eat into your profits. But if you really want to shrink your pile fast, do this through a full price broker. If he does it for you, it’s called ‘churning’ and he can get into trouble. But if you do it, it’s called being broke.

3. Refinance mortgages with a pre-payment fee.
If you’re going to refinance your mortgage, there are a lot of fees involved. So it makes sense to only do it with a significant drop in rates. But the best way to guarantee you won’t take advantage of those rate changes is to do frequent re-fis into mortgages with a pre-payment penalty. It can soak up all the money you’ll save on the re-fi and then some, as each time you refinance you’ll be paying a pre-payment penalty.

4. Speculate in penny mining stocks.
Penny stocks (and by this I mean stocks literally trading for a few pennies) are a great way to shrink that estate. But to amplify it a bit, choose penny mining stocks. Only 1 in a 1000 has a remote chance to succeed, whatever the press releases might say.

5. Start a small business with just a few months of capital.
When you start or invest in a small business, you want to make sure you limit your chances to succeed. So start with less than six months of capital to support the business, instead of the two years (or more) worth that you really need. And if that business doesn’t do well at first, throw lots of money at it without a coherent plan. No reason to stretch out the agony.

There. If you have any money left at all, it’s not my fault.