These could be white elephants that end up sucking you dry and could be even harder to sell off. Could you have a few white elephants that are placing your finances under strain?

What is a white elephant?

A white elephant is a burdensome possession. When it comes to investments that a person can make it can describe an item that is expensive to maintain, unprofitable and impossible to sell. If kept for too long, you could end up losing more money than seeing a return on your investment.

Common white elephants

Under the right circumstances, these are some of the things that can be beneficial towards your finances. But it can take one small decision or wrong investment to have everything going south. This can often result from making a financial decision without fully understanding the long-term effects it will have or making a hasty decision on something that needs professional input. Here are some common white elephants:

Car

Purchasing a car can come in handy, but should it be a car that is expensive to maintain and even harder to resell, you could be faced with a white elephant. Checking the financial implications that come with purchasing your new wheels is crucial. Understand the implications that come with the type of financing you may get and how it affects you financially in the long run.

House

Most people see property as an investment. However, it can soon turn into a financial nightmare if all aspects of owning property have not been considered. Always keep the effects a property will have on your long-term financial goals in mind. Being able to afford a property you have your eyes on in the long run will also be vital. Making sure that you purchase property in an area that is experiencing growth in terms of the valuation, has reasonable rates and little to know structural problems can be beneficial instead of ending with a white elephant.

Risky business ventures

With any business it is crucial to see if it will be viable and whether it could turn over a profit. This means enlisting the help of professionals who will be able to help you determine if a business venture is worth investing in, especially in the area in which you plan on basing it. Doing this can reduce your chances of wasting time and money.

Investments that are trend based

With all the rage of trendy investments such as NFT's & bitcoin, it is easy to get swept up by the few investors who are coining it. However, not having a full understanding of how it works and how you can sell on such platforms to make a worthwhile investment can result in some people investing in something that will be worthless and impossible to sell later.

Excessive policies

Having policies as safety nets is one of the most popular things that South African's invest in. This could be in the form of funeral policies, life insurance, retirement annuities and disability cover. However, having too many can lead to some people facing a financial strain to maintain these as the premiums increase each year. Furthermore, it could lead to you being overinsured.