What Is The Worst Investment?

Updated: October 20, 2022

I’ve often been asked what’s the best investment to buy today, but have you ever asked yourself, what’s the worst investment?

For today, I will answer that question in two ways. First, I’ll give some real and practical answers. Then second, I’ll tell you about a more general answer to the question.

So are you ready to learn? Here we go.


What is the worst investment?

I believe that investing in something that will give you nothing more than 6% worth of your money per year is bad.

Hey, my time deposit only gives me 4% per annum interest, so does that mean it’s a bad investment?

Yes! Time deposits, in general, are bad investments – because they can’t make your money grow higher than inflation (which is around 6% in the Philippines, but it’s usually higher – depending on your lifestyle).

Now before you call your bank and cancel your time deposit accounts, please remember that TD’s and other similar cash deposit accounts exist for a purpose – and that is, in my opinion, as a safe haven for your short-term funds.

That means, your time deposit investments should only have your emergency fund and your extra cash which you plan to use within the next two years.

If you have money that you can afford not to spend for more than two years, putting it in a time deposit is a bad investment.

Is there a worse investment?

Well, putting that money in a savings account, which earns even less interest. Or putting your money under the bed mattress, because that earns no interest at all.

But seriously, what’s the worst investment?

Investing in products that guarantee “high-yields with low-risk” – because I’m 100% sure it’s a scam.

Never, ever, ever, believe someone who promises more than a 10% return on your investment every month. When you hear someone tell you that, turn around and run.

Please note that the most important word there is “promise” – because a 10% or higher return on an investment every month is actually possible – but they’re all high-risk.

Examples of high-risk investments that can give you more than 10% return on your investments are forex, stocks, real estate, network marketing, and of course, putting up your own business.

All those are legitimate investments that “has the potential” to give you high returns, but they are not guaranteed. And one reason why you should always know your risk tolerance before investing.

What is the worst investment?

Now for the more general answer, but actually more important.

The worst, baddest, I-guarantee-you-will-lose-money, type of investment you can make is putting your money in something you don’t understand, or at the very least, have no interest in understanding.

Consider these statements:

  • I heard that the stock market is making new record highs lately – so I think that’s where I should invest.
  • My friend is earning P20,000 a week from this multilevel marketing company. I’ll join him so I can earn that much too.
  • This condo unit is being sold at an affordable price, I’ll buy it and have it rented so I can get passive income.

All these three statements are legitimate reasons to invest in the stock market, in an MLM company, and in a real estate property.

But you’ll be making a big investing mistake if:

  • You don’t know how the stock market works. And you find those company reports and price charts intimidating and boring.
  • You don’t like selling and talking to “people you don’t know”. And you can’t even imagine using the products of the MLM company yourself.
  • You have zero knowledge about property management. Or worse, you don’t even know how to estimate the market value of a real estate property.

How to avoid making bad investment decisions

Now that you know what the worst investments are, it’s time to give you a concrete solution on how you can avoid making them.

The answer is simple:

Work on increasing your investing knowledge and financial I.Q.

Remember that learning is also a form of investment, and it’s an investment that can give you unlimited returns! So read books, attend seminars, seek out mentors – or in simple terms, start being hungry for knowledge.

And that, my friends, is the best way to avoid the worst investments.

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Photo credit: Sharon Pruitt


  1. sir Fritz,

    Good day po.

    I am 30 years old single father living with parents, employee with no savings and a 5 year old daughter. And worst, zero knowledge about Financial Wisdom and surviving from payday to payday before.

    Until I have read Bo Sanchez’ books about “My Maid Invest in Stock Market” and “8 Secrets of Truly Rich People.” Ever since po, my hunger to gain more knowledge and achieve Financial Independence has been my commitment.

    I have watched all episodes of “Pesos and Sense” in Youtube and recently opened an EIP account with Citiseconline. I have also made inquiries with SunLife Financial about their Mutual Fund products po and have read most of your blogs.

    I am confused and desperately need your advice on what to do.

    1.) To begin with, how would you advice me on how to allocate my
    P20,000.00 monthly salary, providing allowance to my daughter while slowly building my investment portfolio sa Stock Market and Mutual Fund and a franchise business someday po sana ?

    2.) With Stock Investments nmn po, nasa “confusion leads to inaction” stage po ako. You have discussed po about “Peso-Cost Averaging” and then there’s Bo Sanchez’ “Strategic Averaging Method (SAM)” and subscribing to TRULYRICH club for their SAM stocks with Buy Below and Target Price Stock Updates. Which is which po ?

    3.) Can you give me advice on how they have arrived at their BUY BELOW and TARGET PRICE computation and also on how to know if a certain stock is undervalued sa market? What is your buying and selling or “BUY and HOLD” principle po regarding sa Stock Investments ?

    With all my respect and admiration.
    Sincerely yours,

    Niño Jesus S. Goloc

  2. Nino,

    I’m an avid ready of Mr. Fritz’ blog and I want to share my opinion with regards to your question.
    1. Advice on allocation of 20k salary
    -Sa natutunan ko learning about personal finance, and sa kakabasa ko ng blog na to at kakapakinig sa radio show in Dave Ramsey. Ito yung mga mungkahing step by step na pwede mong gawin as your financial plan. Wag ka pupunta sa susunod na step, hanggat di mo natatapos ang naunang step:

    Step 1. Have a written budget.
    -ilista mo lahat ng mga pinagkakagastusan mo. Bago mo pa man mapasakamay ang sweldo, planuhin mo na kung saan mo at papaano mo ito gagastusin. Bawat piso dapat may pinaglalaanan na expense/savings allotment

    Step 2. Initial emergency fund (as small as 1/4 ng salary mo ngayon say 5,000)
    -Importante to kasi siguradong nangyayari ang mga inaasahan tulad ng pagkkasakit ng anak at kailangang dalhin sa doctor, etc. Sabi nga ng matatanda, “Save for a rainy day”

    Step 3. Pay off all your debts (starting from smallest to largest)
    -Kung may utang ka sa kamag anak or credit card man, mabuti unti untiin mo na itong bayaran

    Step 4. three to six months of expenses in savings
    -Again, balik tyo sa emergency fund. From the initial emergency fund na 5,000, dagdagan mo pa ito pra umabot ka ng 3-6 na bwang ipon na katumbas ng 3-6 na expenses mo.

    Step 5. Invest 15% of household income for retirement
    – 15% ng 20,000 is 3,000. Itong amount na to, bwan bwan pede mo i invest sa mga mutual funds. This is for your retirement pra kapag tumigil ka na sa pagtatrabaho, yung investment mo na bubuhay syo at di ka aasa sa anak or sa kung sino man para buhayin ka.

    Step 6. College funding for your child
    -Another suggestion is for you to invest additional 15% or 3,000 pesos ulit pra sa college ng anak mo. Again this amount may vary sa situation mo. THis is why step 1 is for you to have a written budget and stick to it.

    2&3. Yung tanong mo nmn about stock market investment. I don’t think there is a hard fast rule concerning this. Pero base sa experience ko (since I’m in Singapore, I trade Singapore and U.S. market), what I do is to look at the history of stocks (www.finance.yahoo.com), get the average price in the span of atleast 5 years, check its fundamentals, and if somehow the current price hits below or within the average price, thats the time i buy.
    But now, I only have less than 5% of my portfolio in individual stocks kasi sobrang risky nga (you can gain money quick, you can also loose money quick). So now, I buy and hold a diversified portfolio of ETF (exchange traded Funds)stocks and funds. But these are not available in the Philippines for in the Philippines we can only trade Phil market and not outside market.

    I hope nakapagshare ako kahit papano sayo.

  3. Hi Nino,

    Tama ang lahat ng sinabi ni Jonathan (thank you pala sa pagsagot :D)

    Ito lang ang madagdag ko…

    1. Indeed, you need a budget, particularly a zero-sum (also called zero-based) budget.

    Read: Zero-Based Budget Planning System

    2. Build your emergency fund and eliminate bad debts. You work on this simultaneously.

    3. Since you already have an account with Citiseconline, I’m assuming you’ve deposited P5,000 there already (the minimum to open an EIP account).

    This is just my personal opinion, but I would advise that you simply choose one of their recommended stocks for cost averaging and use the whole P5,000 that you have there.

    Then, just let it be, and work on building your emergency fund first.

    After that, you can now work on saving for the next P5,000 that you will use to buy your next batch of stocks (of the same company), and reworking your budget so you can afford to buy stocks more consistently.

    Don’t worry too much if you can’t buy monthly (as recommended), you can buy quarterly, every six months, or just once a year. The important thing to remember is to be consistent and never spend more than P5,000 (as per rule of cost averaging).

    4. The Strategic Averaging Method of Bo Sanchez is designed for people who can truly afford the risk of “trading” the stock market – which means you already have stable sources of income, an emergency fund, and perhaps, a life insurance and an educational plan for your child.

    Subscribing to that service, is still an expense in my opinion, and of course, you need to have extra money which you can invest when he issues a buy order – or else, your subscription would be useless, right?

    If you can’t afford that, then it’s better not to sign up to the service (for now).

    You should also know that the “buy”, “hold” and “sell” signals that Bo Sanchez gives actually comes from Citiseconline. As an account holder in COL, you can just look at their “Research” tab and you’ll see their individual stock recommendations.

    Dun lang galing yun… pero makita mo na sobrang daming options dun, which again, could lead to inaction.

    SAM eliminates those choices, and gives you a straightforward answer (aka spoonfed tip) – which you can just “blindly” follow – yun ang best advantage nun.

    Personally, I’m not subscribed to his service kahit marami nang nag-invite sa akin, primarily because I prefer doing my own stock trading decisions – sabihin na nating naging hilig ko na rin kasi ang mag-analyze ng companies and price charts.

    So ayun, I hope nakatulong kami ni Jonathan sa iyo. 😀

  4. Hi Fitz,

    Thank you so much for this post. I’m currently building my Emergency Fund. This statement hits me a lot: “If you have money that you can afford not to spend for more than two years, putting it in a time deposit is a bad investment.”

    I’m still living with my parents since I’m still single and I think that I won’t touch or need my Emergency Fund in 3 years time. Do you have suggestions where I can place it instead of Time Deposit? Is placing it in Mutual Funds a good idea? My Mutual fund allows me to withdraw money when I need it.

    Thank you so much and more power to you and your blog. 🙂

  5. Hi Jasmine,

    An emergency fund needs to be accessible AND it should not be subject to risks – that’s why the best place for it is in a time deposit account.

    It’s hard to say that you won’t touch your EF in the next 3 years because emergencies can happen anytime.

    Mutual funds, can experience market lows and the value of your money might be negative when you need your emergency fund. So don’t risk it.

    On the other hand, remember that an EF is just 6 months worth of your monthly income – and the money you save beyond that is your investment fund.

    So my suggestion – build your EF. Put 3 months in a regular savings account. Put the other 3 months on a 90-day time deposit.

    After that, whatever money you have in excess can now be put in an investment like UITF, mutual funds, stocks and others.

  6. hi, yes all of the above are correct, but first and formost, pay first the Provider, the Giver of everything that you have, HIS 10% of your income. it’s not yours. actually, everything belongs to HIM, but HE is just asking you to be faithful in giving back what is HIS, then everything, every plan, every budget, every investment, will be blessed by HIM. Try it. then,,let’s talk.
    Nellie Z.

  7. BPI Asset Management operation has a lot of free advisors to explain what their funds are and explain to you what are good for you, to make money from your money.

    What is your impression of BPI Asset Management free advisors?

    Please reply here but also send me an email copy.

  8. We have a love of investing in or purchasing things that will through off income. For me, the worst investment at my age (mid sixties) is that which I do not need. When you begin to earn and have extra, it is so easy to pile up unnecessary junk and clutter. It takes up space that could be valuable for some other purpose. You earn nothing from it and the kind of “stuff” I am referring to certainly does not appreciate in value. At least a quality collectable may rise in value over time. The older I get, the more simple I like to keep the plan.

  9. Following up on my post of one year ago: the COVID-19 pandemic has caused my wife and I to think more about the safety and reliability of our investments. Our largest business operation is now back, starting to throw off income again. It is also underperforming all other investments we have created. In one sense, it is now our “worst” investment. Our biggest portfolio has become problematic with more than 30% of the workforce (our clients) not returning to work. Many of those that have come back are on a limited schedule.

    The good news, we have been invited to do business with a local government office. It will be a little sad to close down our oldest and largest portfolio that served many clients who are the staff of a local college. Business wise, it is certainly the correct decision. Freed up capital may be immediately diverted to serving the needs within the Government office. I will call that a good trade, exchanging our worst performer for what, in theory, should become our best yet oppertunity.

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