Good Investment or Bad Investment?

By: Staff
Image: refer to hsw

About This Quiz

In a poor economy, we think twice about every dollar we spend, every dollar we invest and every dollar we could lose. Do you have the financial know-how to pick the best investments and pass on the worst?

Which type of real estate investment is considered sound in a down economy?

In an economy that has sustained low prices and low mortgage rates, the purchase of a family home is considered a sound investment. Unlike office buildings, which show high vacancy rates, and timeshares, which offer iffy returns in the best economy, a home that you plan to use and hold for several years will likely pay off in the long term.

Which investment can yield more than $200,000 in 40 years?

According to the Consumer Federation of America and Primerica, an investment of just $25 per week in a conservative stock portfolio can produce more than $200,000 in 40 years. The key is to find a type of investment that outstrips inflation but doesn't leave you holding the bag.

Which collectible item will produce a sure profit?

Making a profit on items like cars, stamps, coins and jewelry depends on being perfectly accurate about the public's interest in those items when you want to sell. And your costs for storing and insuring the items may outstrip potential sales value.

How much time, on average, does it take to make money on gold?

It usually takes 10 years or more. The runup in gold prices started around 2001, and it took nine years for prices to reach the level they held in 1980.

What downsides do investments in gold, art, classic cars and antiques have in common?

The best investments provide income each year, and to make money on any investment, you have to make sure your costs to keep an item don't outstrip your potential return.

What are the long-term advantages of saving money in a bank passbook savings account?

Low-percentage returns on savings accounts tend to run lower than increases in the cost of living. In the long run, that means that for every dollar you place into an account, you may preserve 95 cents.

Which type of life insurance provides the most predictable payoff?

Term insurance is the most straightforward life insurance option. Other types of accounts hold the chance to earn money on payments for premiums, but often those accounts are tied to high-risk investment portfolios, and they can incur substantial administration fees.

Which investment is best considered with a crystal ball?

Both. Investment experts describe these tools as gambling. You're not buying the stock or the commodity; you're buying the chance that they will make money.

Which type of investment in the stock market is most likely to be a fraud?

Low-cost stocks, or so-called microcap stocks, sell for less than $5 per share. They are offered by companies that have shorter track records, and because those companies have lower reporting requirements to regulators, the opportunities to defraud investors are greater.

What are the signs that a potential investment could be a scam?

Every investment should show poor performance at one time or another. Con artists attract investors who are skittish about losses in the stock market by showing returns that never falter.

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