10 Things Savvy Investors Always Refuse To Buy

The investment marketplace is loaded with interesting and often exciting investment opportunities. All sorts of asset classes are out there to explore, and every investor will have their own preferred blend of opportunities. Even within these worlds, no two investors will have the same outlook on things. Real estate investors, for instance, won't always agree on the best property types to buy into for stable, growing returns. However, frugal spenders and savvy savers have a few key strategies in common. Most investors who focus on smart trading strategies have an eye on the long game while also exploring short term opportunities at regular intervals.

They also avoid certain assets and sub-types. Savvy investors work to mitigate risk while focusing on ways to amplify growth opportunities. They don't throw their capital around without good reason, and they almost always refuse to buy assets and investment opportunities that don't tie directly into their long-term vision. The below investment tools tend to underperform when compared to their direct alternatives. As a result, savvy investors will frequently avoid them unless the stars align to create a buy-in opportunity that can't be missed. However, these kinds of circumstances rarely come along, leaving these asset types and investment tools relegated to the dust heap for plenty of investment strategies.

Starting things off, penny stocks are an interesting asset class that can occasionally split opinions. It's undeniable that changes in value among stocks trading in the single-digit dollar figures can spark huge percentage swings in an investor's position. However, it should also be noted that these kinds of assets were the central money-making opportunity for charlatan investment professionals like Jordan Belfort, the subject of "The Wolf of Wall Street." The problem with penny stocks is that they are largely unregulated. This makes them susceptible to market manipulation through tactics like pump and dump schemes. Not every company trading at $5 or less per share (the official designation of a "penny stock") is going to pose the same underlying risk in this way, but the opportunity is there for many of them, making every penny stock you might consider a riskier investment then you might be willing to accept. Savvy investors tend to shy away from these tools unless there is a particularly useful opportunity on the table.

A personal example might be worth exploring here. During the pandemic, Hertz filed for bankruptcy and dropped precipitously from standard fare down into the cents-per-share realm. I bought up shares at around the 25-cent mark (a risky but inexpensive strategy to dilute my cost per share in an existing position). Even though Hertz was trading in this range, it didn't exactly feel like a penny stock in the classic sense. But, realistically the company was either going to dry up entirely or come out of bankruptcy in some new format to make a recovery. In this case the latter outcome prevailed, but that was far from a certainty.

Smart investors looking to cover financial needs of their loved ones are frequent investors in life insurance policies. Life insurance delivers a critical line of defense to support financial needs in the event of a death or incapacitation to a primary household earner. Buying a life insurance policy offers you the ability to give your family members the financial resources they need if your salary dries up as a result of an accident, illness, or injury. They come in two main flavors: Term and whole life insurance coverages. Term life insurance is usually the more effective solution.

There is value in a whole life policy under certain circumstances, but generally speaking, those who are investing for their future and looking to shore up financial vulnerabilities will want to provide this financial defense at a reasonable price tag and only for a certain period of time. For one thing, a well designed savings strategy will replace your salary checks when you retire. This means that the requirement to build in a backup option evaporates at the same time that you retire and stop taking a salary. As a result, some people opt for a term life insurance policy that continues to provide coverage through the end of their working years. Others focus on shorter timelines involving the youthful years of their children's growth. No matter how you slice it, term policies tend to be more financially viable than whole life options.

A CD is designed to operate in a manner not unlike the bond marketplace. In both assets, you will buy into an investment product that is governed by a guaranteed interest rate and a definitive maturity timeline. For instance, you might buy a 12-month CD featuring a 1.64% rate, the average in the current marketplace according to the Federal Reserve Bank of St. Louis. By leaving your money in the account for the 12-month term you'll get your principal investment back plus interest at that guaranteed rate. The problem is that CD's just don't deliver the value that investors will be looking for. Because they are organized in much the same way as bonds, buying into a bond is frequently the better choice. Bonds allow you to leave your money to continue maturing rather than making a decision on what to do once the date arrives and they frequently provide more options for duration and even the issuer you choose to invest in. The 12-month rate is also standing at 3.6% currently, according to FRED.

Some investors who have bought into CDs do so with money set aside in a high-interest savings account. Many of these accounts offer CDs that promise elevated interest rates over the existing money you'd make by just utilizing the standard account type. However, locking your money up in a CD freezes your ability to use the capital. If this money is part of your emergency fund, having access to it is worth far more than a slightly elevated interest rate. On the whole, CDs do every part of the savings task just a little worse than their alternatives.

Trying to time a big company's return to high stock pricing can be catastrophic. The stock market as a whole, and companies individually, go through periods of growth and contraction. No asset can continue growing without interruption forever, and the same is generally true for trading periods involving declining prices. Big companies don't tend to go out of business nearly as often as smaller ones, and so many investors may be tempted to buy into brands that have taken a major hit in recent weeks or months. 

Boeing is a good example of this kind of trend. It's perhaps a bit inadequate to suggest that a company is "too big to fail" in the contemporary world. But if this label was going to fit a brand, Boeing might be a good candidate. The company enjoys a market cap of $142 billion and owns billions in contracts for the delivery of its aircraft. Boeing was awarded a $7.2 billion defense contract in late November 2025, as just one example of its staying power long into the future. However numerous scandals and catastrophic plane crashes have tanked public sentiment in the brand. Boeing's share price has taken a major hit and it remains a volatile asset years later. Buying up stocks in free fall can yield a huge upswing, but it can also mire a portfolio in underwhelming returns for years to come. It's impossible to time the dip perfectly, so trying to get in as a stock tanks or near its nadir is a challenge you'll frequently fail.

Generally speaking, if you consider yourself something even verging on the title of "savvy investor," you won't likely need to touch annuities. This product exists as a fixed income generating asset for those in or nearing retirement. Buying into an annuity allows you to clarify your position in the present and gain crucial peace of mind heading into the future. An annuity contract spells out clear terms for how much you'll need to pay into the product in order to get back out a certain value of monthly retirement income distributions. Buyers can therefore tailor annuity tools to their investment capabilities and retirement income needs. Annuities can be valuable to savers and investors of all sorts, but those who are working diligently toward building their own retirement portfolio can generally gain better returns by simply staying the course and continuing to manage their own buildup and later drawdown strategies.

Another issue with annuities comes in the form of fees. In order to streamline the process of building the retirement income stream you're looking to achieve with an annuity, you'll ultimately have to pay more. Savvy investors don't tend to need this tool, and by avoiding it they can keep more money in their pocket and maintain greater control over their asset blend and drawdown strategy.

According to security.org, a full 28% of Americans own cryptocurrency in 2025. The asset class has been experiencing tremendous pricing runs in recent years, and even with extreme meltdowns taking place alongside these huge upswings, many investors still flock to the digital currency marketplace. Cryptocurrency offers an interesting alternative to traditional fiat money. The tool promises a decentralized financial experience that isn't reliant on governments or even banks to operate. But what it delivers in cool factor and promises in user ownership it lacks in transparency and a basic underlying sense of value.

There's a singular, bare fact that remains of a cryptocurrency that investors cannot overlook. These tools feature a financial value that is underpinned by literally nothing but hype and interest. A loss of consumer interest in the product would severely undermine the entire project of decentralized finance. Similarly, new government regulation could crater the marketplace entirely. It's also worth noting that numerous cryptocurrency scams have taken place in recent years, including the FTX grift that left over 1 million creditors seeking to be made whole in the aftermath. Savvy investors tend to avoid this extreme level of volatility. However, under the right conditions a small portion or an investor's portfolio could be utilized in this kind of asset with the understanding that great returns are possible. But a complete loss is potentially equally likely.

Every aspect of the stock market experiences ebbs and flows. The only constant in the marketplace is change. Any number of new facts can upend stock prices within a sector, influence an individual company or send ripples across the entire market. For instance, wars throughout history have often produced hugely varied stock market results with some sparking growth and others creating a chain reaction in which market decline follows. On other occasions, global conflict has had little influence on the market and stability has reigned supreme.

It's important to keep in mind that changes are inevitable, they can happen without warning and in unexpected ways. Therefore, a company on an exceedingly long tear isn't one poised for continued growth but rather a correction event. No brand can keep up a trajectory of explosive growth forever, and the longer a bull run continues, either in the market as a whole or in terms of an individual stock, the more vulnerable its position becomes. Buying into a company that has continued to see historic returns is actually more likely to see you buying at a peak rather than along a continued trend of expansion. Savvy investors know this, and they often consult indicators and tools like a company's P/E ratio to help make sense of trending price movement and long term value.

Lottery tickets are an interesting financial product. Depending on the way you view the lottery, this can either be a fun entertainment purchase with lightning in a bottle-type potential, or an extremely terrible investment opportunity. Those who see the lottery as an investment are buying into a failing product. Your odds of winning the lottery are worse than the odds of being struck by a meteorite! There is absolutely no reason to invest in lottery tickets, but even with that reality well understood in the modern marketplace, Americans still spend over $100 billion collectively each year on tickets to play the lottery.

Buying a ticket infrequently can be a fun way to spark conversations about what you and your friends or family members would do with a gigantic payout. But that's really where the value of the lottery ends. With such massively low odds, considering this to be an investment can only ever result in throwing away money rather than truly accessing the potential to yield even marginal returns. It's a unique and entertaining game of escapism and wonder, but not a viable investment strategy.

Actively managed ETFs tout themselves as investment tools with great responsiveness to market conditions. An ETF is an ideal investment tool for traders who want to build stability into their portfolios. ETFs offer a single investment purchase that bundles together dozens, hundreds, or even thousands of individual company stocks to smooth out volatility and downside potential while leaning into all of the great upside that makes many investments intriguing. These tools can easily stand as your primary or even sole investment solution in either an Individual account or a retirement vehicle looking to build wealth over the long term. They're exceedingly effective because they help tap into the most important feature of the stock market, time. You won't get rich quick with an ETF investment, but continue pressing the strategy, and you'll almost certainly get rich eventually.

ETFs offer two primary layouts: Passive and active funds. Passive ETFs are governed by a preset rulebook and are typically rebalanced based on algorithms and automations. Active investments on the other hand are overseen by a fund manager with a more direct approach, even if the rules they operate with might be largely similar. The problem with active ETFs is that returns are often very similar to those in passive funds, but they cost a lot more in fees for investors. There's really no reason for an investor who takes an active role in their portfolio to pay someone else to generate roughly the same returns as a passive, cheaper choice. Regardless of the way you are already doing it yourself, active funds just don't fit the brief that a typically hands-on saver will set for themselves.

Airlines are an intriguing investment opportunity. People travel in droves, with over 44,000 flights handled by the FAA every day in 2025 (via FAA). However, it might be worth taking a page out of Warren Buffett's book. The Oracle of Omaha, a legendary investor with plenty of money tips and tricks that others can borrow, copy, and emulate, has had varying takes on the airline industry throughout the years. At one point he called them "death traps" for investors, only to do an about face a few years later and invest heavily in Delta, Southwest, and others. In recent years, Buffett has returned to a bearish stance on airlines.

These businesses are growing their bottom lines but they're doing it at the expense of the customer base they ostensibly serve. Customer loyalty is almost entirely dead in the airline industry. Airlines are jacking up the prices for flights and reducing the service level they offer alongside continuously inflating rates. In the past, carry on baggage was a given and plenty of heft and size was included in your ticket. Checked baggage was reasonably priced, and seat selections didn't cost you an arm and a leg. Today, even a bottle of water or a pack of crackers will run you an extra charge on some airlines. The industry is showing financial alarm bells for investors because it is continuing to nickel and dime customers. This signals a systemic undercurrent of instability within the marketplace, even as companies continue to report strong earnings. This kind of discrepancy is the type of investment that savvy investors tend to notice and shy away from.