Beware of these overhyped financial strategies

A good rule of thumb when you’re trying to eat healthy is to beware of any food you see advertised. The most beneficial fare — whole grains, fruits, vegetables — tends not to have a marketing budget.

Similarly, investments that are enthusiastically pushed by commissionearning salespeople may not be the best for your financial health. Before you buy any of the following, you’d be smart to investigate lower-cost alternatives and to consult an objective, knowledgeable third party, such as a fee-only financial planner.

Equity-indexed annuities

Equity-indexed annuities are insurance products that base their returns on stock market benchmarks. They’re often promoted as a way to benefit from stock market gains while being protected from losses.

But the contracts typically limit how much investors get when the stock market rises, says certified financial planner Anthony Jones of Groveport,

Ohio. Two clients, who had purchased equity-indexed annuities before joining his firm, received only a fraction of last year’s 30% increase (as measured by the Standard & Poor’s 500 benchmark).

“They expected bigger returns in 2019 and were very disappointed,” Jones says. “They each had less than a 3% return.”

Equity-indexed annuities typically come with high commissions and surrender charges that can make it expensive to get your money out, says CFP Scott A. Bishop of Houston. The contracts can be extremely complex, and many buyers don’t understand what they’re getting, he says.

“They are not necessarily bad products, but they are really more like bond alternatives than stock alternatives,” Bishop says.

Reverse mortgages

Reverse mortgages allow homeowners 62 and older to convert some of their home equity into a lump sum, a series of monthly checks or a line of credit. Borrowers don’t have to make payments on the loan, which doesn’t have to be paid