Although every investor is different, most should adjust their portfolios in retirement. During your accumulation phase, when you’re earning regular income and have time to ride out the ups and downs of the market, you can usually afford to be a bit more aggressive with your money. But after you retire, you’ll likely be living off some combination of Social Security and your investment portfolio.

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Without income from a job to buy market dips, and with an increasingly short time period to wait out any corrections, your priority should be to avoid making big mistakes. With that in mind, here’s a look at some of the types of investments that most investors should stay away from in retirement.

Cryptocurrency

Cryptocurrency is one of the most volatile investments, and it doesn’t have the characteristics that most investors need in retirement. Cryptocurrency doesn’t generate any revenue or earnings, it doesn’t pay any dividends or interest, and it isn’t a hard asset, making it hard to value. Some famous investors, like Jim Rogers, even think crypto will eventually become worthless. Put all of these factors together and cryptocurrency is the type of investment that retirees, particularly those living on a fixed income, should avoid altogether. 

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Penny Stocks

There are two types of stocks commonly referred to as “penny stocks,” and both should be avoided by retired investors. The most dangerous are those that trade for literal pennies on the over-the-counter market, colloquially referred to as the “pink sheets.” These companies are highly speculative and often manipulated by unscrupulous stock promoters and have no place in a senior’s portfolio. 

The term “penny stocks” also refers to companies that trade on major market exchanges for less than $5 per share. While not as speculative as over-the-counter companies that trade for literal pennies, these companies have either fallen on hard times and/or are on their way to bankruptcy. While a recovery is possible in some cases, that’s a highly risky bet to make for an older investor who is simply looking to protect the value of their holdings.

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Illiquid Investments

When you’re retired, the last thing you want to do is tie your money up for a long period of time. Not only is there no way of knowing exactly how long you’ll live, you’ll likely need to access cash in a short period of time at some point once you stop earning a regular income. Whether it’s for an unexpected medical expense, vehicle repair, home maintenance issue or any of countless other types of emergency expenses, you’ll want to keep most of your money liquid. This means that you should avoid investments like limited partnerships, hedge funds or even longer-term CDs, all of which have restrictions and/or penalties for withdrawals. 

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Meme Stocks

Meme stocks have been all over thefinancial newsthe last few years, as online investors have piled into these otherwise unextraordinary stocks and pushed them up to stratospheric highs. Names like AMC Entertainment and GameStop are the poster children for meme stocks, which seem to trade in an unpredictable manner based on emotions and online posts, rather than from earnings and profits. 

GameStop, for example, gained 700% in January 2021 alone, and moves of 75% or more even in a single day aren’t unheard of. But the downside can be just as treacherous. In June 2024, for example, GameStop fell 40% and 12% on successive days, and the stock still to this day remains more than 70% below its January 2021 high. The point is that this type of volatility will not only keep you up at night, but it can also devastate your retirement portfolio. 

Bonus Tip: Avoid Getting Too Conservative

Although investment portfolios should generally be much more conservative at age 65 than at age 25, there’s still an argument to be made that getting too conservative can be a problem as well. At age 65, you may still have 20, 30 or even more years of retirement ahead of you. Over that long of a period, you’ll still need growth in your portfolio to ensure you don’t outlive your money. While you should avoid getting too aggressive and having a 100% equity portfolio, for example, most financial advisors will recommend that you have at least some of your retirement account in stocks. With a multidecade retirement ahead of you, you’ll have time to ride out the ups and downs of this portion of your portfolio, all while potentially enjoying the benefits of higher long-term returns. 

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This article originally appeared on GOBankingRates.com: 4 Investments To Stay Away From in Retirement

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