Our education system equips us in every way to earn money but does not equip us with the skills to manage our money.

End result: Poor investment choices, unnecessary personal loans & credit card debt, & overall a stressful relationship with money. Unfortunate, isn’t it?

Saying NO to toxic investments that sap your wealth can be your first step to improve your financial life. Today we are sharing with you 5 toxic investment choices that you must avoid at all cost.

Toxic Investment # 1: Traditional Insurance Plans

Insurance = investment.

There cannot be more dangerous and wealth-destroying advice than that. And the sad part is, this advice gets passed down from generation to generation. And it closes the doors of abundance and prosperity for many families.

You also have pesky insurance agents who lure you into the guaranteed type insurance plans through their clever sales pitch. After all, when it is about money, there is a temptation to fall for the word “guarantee”, isn’t it?

Remember, if you want a healthy financial life, DO NOT EVEN THINK OF MIXING INSURANCE WITH INVESTMENT. The primary drawbacks of these plans are as follows:

  • Neither you get proper insurance cover, nor you get sufficient returns on your investment.
  • These financial products are easy to get in, but it is challenging to get out once you are in.
  • The products come with charges & also, there is significantly less transparency in terms of performance.

Toxic Investment # 2: Unit Linked Insurance Plans (ULIP)

Another category of insurance-cum-investment plans which you must avoid is Unit LinkedIn Plans (ULIP). You can call them the Chhota Bhai (young brother) of traditional insurance plans.

Traditional plans invest in fixed & low-return income avenues. However, the ULIPs offer various investment avenues that include equity markets. This means that there is a scope for a higher return in ULIP, but then the risk is also high.

The insurance companies know the pain points of young investors very well. So, they try to market these products as child plans, retirement plans, etc. And young investors fall prey to these marketing gimmicks.

Why don’t we recommend ULIPs? More or less on the same reasons as traditional plans – mixing insurance & investments, high charges & lack of flexibility & transparency.

Toxic Investment # 3: With Return of Premium (WROP) Term Insurance

Since the past few years, there has been a lot of awareness of term insurance & the fact that it is the best product for your life insurance needs.

However, know that we’re talking about PURE TERM INSURANCE, where you don’t get anything if you are alive at the end of the policy period.

As an investor, you may think – why should I pay for life insurance that doesn’t return me anything? To take care of this objection, marketing guys may try to sell you WROP type term insurance which promises to pay your premiums back.

The problem with such plans is that premium is very high. Part of it goes towards investment to help you give your premium back on maturity.

A simple calculation will show you that the return from these plans is abysmal. And that is why you are much better off by buying a pure-term plan. For the extra money, you can invest in a better avenue like mutual funds or PPF.

Toxic Investment # 4: Fixed Deposits, NSC, Post Office Products:

This again mainly comes from our parents and grandparents telling us to be safe, choose safe.

They had their reasons for this advice. But the fact is, they lived in a different world from us. A world where inflation was less, joint family structures were intact, jobs were secure, and so on.

The biggest problem with sticking with these fixed-income products is that they do not protect you from inflation. Inflation is like a termite that slowly & silently eats away your wealth!

This means that over the years, you feel happy that your money is growing on the surface. But as you near the goal, you end up with much less money than what you actually need. And it’s too late by that time. Sad, isn’t it?

So, remember, having all your money parked in these “safe” products is actually risky!

Toxic Investment # 5: Stock Tips, Futures & Options

When you are not young, you have a world of investment options in front of you. And you also expose yourself to the world of stock markets, tips, F&O, and whatnot. And then there is this rush to invest in something “exciting”, no?

Direct investment in equities, intraday trading, F&O – these activities require a very different level of skill & temperament. Don’t risk your hard-earned money in the rush of excitement. Better, hand over the money to professionals & let them manage it for you. And the best way to do so is through mutual funds.


As a young investor, your key to wealth creation is earning more money and making fewer mistakes. When you say no to toxic investments, you open yourself up to the right investment avenues. This opens the door to a peaceful & balanced financial life for you. In the end, that’s what all of us want, isn’t it?
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