"Losing your money has never been easier!"

While no financial firm would ever use this slogan, unfortunately some perfectly legitimate offerings could crush your savings faster than you can say Ponzi.

A simple combination of confusing rules and small print can create a "toxic" investment. We’ve started the list here. How many more can you add?

Make Mr. Yuk proud.

401k Loan: It's my money, why not use it?

While it's seems like a reasonable option in case of an emergency, a 401k loan involves borrowing up to 50% of your vested 401k balance. The borrowed portion no longer accumulates any investment returns. Plus, you have to pay non-deductible interest on the loan (to yourself at least, but it also gets taxed later). These loans can come back to haunt you if used or spent on a depreciating asset.

TOXIC FACTOR: If you lose your job or leave your job, with a loan outstanding, you have to pay the loan back within 60 days or the loan will default and the payout will be considered a hardship withdrawal from a 401k. That would mean a 10% penalty on the withdrawal, plus income tax on the loan amount.

Tax Refund Loan: Why should I wait to get my money back?

Known as refund anticipation loans (RALs), tax preparation firms (in cahoots with banks) offer these loans to unwitting consumers who can’t wait for Uncle Sam and the state to process their tax refunds. A cousin of the payday loan, title loan and pawn shop, RALs are now being loaded on to pre-paid debit cards that charge fees for everything except spending money! Given the speed with which federal refunds are now processed through e-file, RALs are less needed but still offered.

TOXIC FACTOR: The rates and fees on refund anticipation loans, when extrapolated into an APR, can top 100%! While the loans carry no variable rate or interest charges and are paid through one-time upfront fees, RALs carry significant costs compared to the amount of money lent.

Margin Trading: There's no way that stock goes down!

A seemingly harmless option on your online or traditional brokerage account, margin trading can do in even the most knowledgeable investor. Buying stocks on margin involves buying stocks or other securities with borrowed money. Fortunately, the Federal Reserve through Regulation T mandates that the initial margin can be no more than 50% of the purchase. You can buy a $50 stock with $25 cash and $25 borrowed. No matter which way the stock goes, you have to pay interest on the loan and pay back the full $25.

TOXIC FACTOR: Margin borrowing, which involves variable rate loans, can bite even the most sophisticated investors when stocks fall (or shorted stocks rise) and the borrower gets a margin call. This means you either have to put up more cash collateral or sell stock to raise the money.

Leveraged Exchange-Traded Funds: Everybody's doing it, why shouldn't I?

Exchange-Traded Funds (ETFs) have become so popular that the Financial 3x long (FAS) and Financial 3x short (FAZ) are both among the most actively traded securities in the entire market. These products used to be simple, cheap alternatives to index mutual funds. But, with the introduction of leveraged ETFs, a simple product became a lot more dangerous. The funds, which trade on stock exchanges, use a variety of financial derivatives to magnify the DAILY returns of a select stock index or sector. 

TOXIC FACTOR: These ETFs only replicate the leveraged return of the underlying index on a daily basis. Hold for more than a day, and you could be surprised at the results.

Life Insurance Settlements: Why not cash out now?

While insurance firms are heavily regulated, the secondary market for non-term life insurance is filled with many questionable practices. Life settlements are legitimate tools for some policy holders and involve a broker buying out life insurance policies and selling them to an investor who agrees to continue paying the policy until the termination event. When a policy holder has been diagnosed with a terminal disease and less than 2 years to live, it’s known as a viatical settlement. This is a cousin of annuities schemes which tend to target unwitting senior citizens.

TOXIC FACTOR: Life insurance settlements, useful at times, can be bad for both the seller and the investor. Policy holders are often enticed to sell their policies even if they don’t need to or are strapped for cash in the short term. Investors, on the other hand, can be suckered by promises of returns that don’t materialize.

Next toxic tendency: What did we miss in this list? >>