Complexity Is the Investing Devil

What do the following investments have in common?

• Options
• Covered calls
• Collateralized mortgage obligations
• Non-traded REITs
• Master limited partnerships
• Variable annuities
• Equity-indexed annuities
• Hedge funds
• Principal protected notes
• Private equity

Here’s the answer: They are all complex investments. As a result, assessing the risks involved with owning these investments can be challenging. They also generate meaningful commissions for the brokers who sell them so enthusiastically.

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