Kiplinger Today

Kip Tips

Avoid This Investment

Hey, have you heard about leveraged exchange-traded funds, one of the fastest growing ETFs? These funds let you double or triple the results of an index. 

But, wait, did you read the fine print? Those results are over the period of one day. If an index is up one day, you'll win big. But if it drops the next, you'll lose big. These funds are so volatile that ordinary investors should steer clear of them. In fact, the North American Securities Administrators Association named leveraged ETFs as one of this year's top ten investor traps.

Investors in leveraged ETFs betting on market gains have lost 58% of their money since September 2006, according to TrimTabs Investment Research. To learn more about these risky funds, see The Perils of Leverage. To see which other investments you should avoid, see NASAA's complete list of investor traps and 10 Investments You Don't Need.

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