Many people lose money on their investments without realizing it. According to Lonnie Thompson, who is both an investment advisor principal and the owner of True North Advisors, if you don’t have a clear purpose for your investment strategy or a specific plan for a stock, that money can often go to waste.
But what about specific types of investments that experts believe aren’t worth the money? We talked to six financial advisors to gather their insights. If you’re in need of personalized help with your investment portfolio, you may want to look for a financial advisor through reputable organizations.
Investment professionals say it’s a waste of money at this point.
High-fee mutual funds and certain AI stocks — Jeff Muscatello, Financial Risk Manager
Many investors miss out on significant returns due to the layered fee structures of high-fee mutual funds promoted by wirehouses. With advisory fees added on top of expense ratios and hidden costs, customers often find it unclear what they are actually paying for or what assets they own. The investment landscape today also bears risks, particularly the cyclicality of AI finance. Billions circulate among chip makers, cloud providers, and LLM designers, which obscures true demand from outside customers. This raises concerns that investors might be overpaying for companies that still lack a clear path to profit.
Stocks driven by hype — Jason Burnat, President and CEO
Some stocks are just too tied up with short-term trends for my taste. Buying based on social media buzz or flashy headlines often overshadows substantial fundamentals. For example, even with a 65% return from gold last year, that’s not a guarantee for the future. People should be cautious; just because something skyrocketed last year doesn’t mean it will do so again.
Certain pensions and REITs — Ronnie Thompson, Investment Advisor
Annuities can serve specific financial goals well. They offer protections and guarantees like income and interest. However, they can also be quite complex and might block access to your funds for extended periods. If the wrong individuals purchase these products for the wrong reasons, it can become a costly mistake. Likewise, real estate investment trusts (REITs) can be misapplied. They might appear attractive because they let investors tap into real estate without the management hassle, but they come with risks, including illiquidity and difficulty in withdrawing funds.
Single-family rentals — Preston D. Cherry, Wealth Advisor
High-income individuals often overvalue single-family rental properties in their quest for real estate exposure without wanting to actively manage it. While financial perks are usually highlighted, other factors such as time and emotional costs are typically underestimated. Even with a property manager, rentals demand ongoing oversight and decision-making that can quietly detract from both income and quality of life for busy professionals.
Investing with high fees — Jillian Stevenson, Assistant Professor
The biggest waste in investing is paying high fees for subpar results—this can come from financial advisors or funds like mutual funds or ETFs. Before making investments, it’s crucial to assess the fees involved and seek out alternatives that may offer similar results with lower costs.
Investing based on hype — Ryan Haiss, Certified Financial Planner
Chasing hype or trending stocks often leads to poor outcomes. By the time individuals hear about a hot stock from a friend or in the news, a lot of the potential gains might already be gone. When volatility hits, those same investors often sell out in fear, locking in losses. It’s a classic cycle of buying high and selling low that damages returns. In contrast, well-structured portfolios with clear goals and appropriate risk tolerance usually yield better results. Sometimes it’s the calmer, more straightforward strategies that outperform emotional choices in the long run.
