After nearly nine years in which stock prices quadrupled, the market’s February plunge reminded investors that it’s not always easy to grow your assets. And part of what can make it difficult is the many wrong choices people make that can quickly drain their investments and savings.

To help you avoid the potentially ­disastrous money moves you might be tempted to make now, Bottom Line ­Personal asked six top financial experts for the very worst places to put your money in three overall categories…

Stocks and Stock Funds

Stocks of companies that deal in cryptocurrencies. Despite the extreme volatility and risks surrounding ­cryptocurrencies, many investors are in awe of last year’s explosive gains of the most famous one—bitcoin—even if they ­really don’t understand digital currency. Some of those investors figure that they can profit in a safer, less volatile way by investing in the stocks of well-known, publicly traded companies that are issuing their own cryptocurrencies or that use the technology behind cryptocurrency.

But investing in these stocks can be riskier than it’s worth.

Example of a company embracing cryptocurrency: Eastman Kodak, the 137-year-old film company, failed to adapt to an increasingly digital world and filed for bankruptcy back in 2012. The company has struggled since then, and the stock suffered until early this year.

In January, Kodak partnered with a paparazzi photo agency and penny-stock promoter to offer a digital currency called KodakCoin to help make sure that photographers get paid when their photos are used. Kodak’s stock price tripled in reaction, even though it is difficult to see how the highly speculative venture will boost the company’s profits.

Charles Sizemore, CFA, chief investment officer of Sizemore Capital Management, an investment advisory firm based in Dallas, and coauthor of Boom or Bust.


ETFs that multiply their investment stakes with leverage. These exchange-traded funds use so-called financial derivatives to leverage, or amplify, the returns of a broad underlying index. They can provide eye-popping returns in rising markets. But despite powerful gains last year and further strong advances early this year, the market is growing more treacherous as valuations soar. That means the use of leverage, which could enhance returns if the stock market advances, grows increasingly risky in the face of possible sharp pullbacks in stock prices.

Example of an ETF that investors should avoid now: ProShares Ultra-Pro S&P500 ETF (UPRO) seeks to at least triple the returns of the S&P 500 index each day. The ETF has returned an average of 46% annually over the past five years. In the next stock market correction, though, the fund could quickly lose 50% or more.

Neena Mishra, CFA, ETF research director at Zacks Investment ­Research, based in Chicago.


Mutual funds that invest in big ­dividend-paying companies. These funds were stars back in 2014 when fears of an economic slowdown and near-zero yields on bonds led ­investors to rush into the shares of slow-growing but steady companies. But these stocks are falling deeply out of favor now and face difficulty as interest rates rise and bonds provide increasingly higher yields.

Example of a dividend-paying fund to avoid: American Century Utilities Fund (BULIX) recently provided a yield of 3.5%, but its returns have been dismal. The fund, which invests in telecommunication companies such as AT&T and electricity providers such as Entergy and PPL, returned only 0.5% over the past year while the S&P 500 returned 26% in the same period.

Janet M. Brown, president of FundX Investment Group, based in San Francisco, and editor of the NoLoad FundX newsletter.


Bonds and Bond Funds

High-yielding municipal bonds. Cash-strapped cities and states across the US are selling muni bonds backed by sales tax revenue and promising investors that they’re likely to be paid back first in the event of a default. That’s why the bonds get credit ratings of A or higher even though the municipalities behind them are facing multimillion-dollar deficits. But these bonds could easily blow up in investors’ faces. In past municipal bankruptcies, judges often have favored the interests of other parties such as retired employee pension holders over investors holding sales tax revenue bonds.

Example of a high-yield muni bond to avoid: Chicago is seeking to raise a half-billion dollars by issuing sales tax revenue bonds due January 2, 2038, with a 5.25% annual yield and a AA rating. But the nation’s third-largest city is a high-risk gamble for bond investors because it has more than $62 billion worth of unfunded pension obligations.

Marilyn Cohen, CEO of Envision Capital Management, which manages bond portfolios for wealthy investors, El Segundo, California. She is author of Surviving the Bond Bear Market.


Long-term investment-grade bond funds. These funds, which hold a mix of US Treasuries and high-credit-­quality corporate bonds with ­maturities of 10 years or more, defied conventional wisdom by doing well last year, thanks to moderate inflation and low interest rates. But numerous factors are likely to push down bond prices in 2018 and beyond. Among the factors, new federal tax cuts likely will boost economic growth and push up inflation. Also, demand for US debt will drop as Japan and China reduce their purchases.

Example of a bond fund to avoid: Vanguard Long-Term Bond Index Fund (VBLTX) performed well in 2017, up 11%. But its recent 3.5% yield is not enough reward for the excessive risks that investors face. The fund’s average duration (a measure of interest rate sensitivity) of 15 years means that it is likely to suffer a 15% loss for every one percentage point rise in long-term interest rates.

Robert M. Brinker, CFS, editor of ­Brinker Fixed Income Advisor, a newsletter based in Littleton, Colorado.



Savings accounts and certificates of deposit at big banks. These institutions are familiar and convenient with thousands of branches around the country. And if you already have a CD or a checking account with a big bank, it’s easier to keep all your money there than it is to deal with a tiny credit union or shift money in and out of an online-only bank. But the yields offered by these nontraditional alternatives are growing rapidly as interest rates rise, while yields at major banks are stuck near zero.

Examples: A 60-month CD pays a maximum of 0.85% annual percentage yield (APY) at Chase Bank, compared with a 3.9% APY at Connexus Credit Union ( The top rate for a savings account at Wells Fargo yields a paltry 0.1% per year, compared with 1.7% at Able Banking (

Ken Tumin, founder of, which monitors interest rates and various developments at about 15,000 banks and credit unions.

Related Articles