We present six complex investments you might be tempted to buy and the common sense options you'd be better off choosing. By Jeffrey R. Kosnett, Senior Editor November 1, 2009 Harry S. Truman said, "If you can't convince them, confuse them." Truman didn't live to see dubious financial creations such as inverse floaters or equity-linked annuities. But he knew that gimmickry rarely beats out common sense. Truman was also famous for his quip, "If you want a friend ... get a dog." To which we'd add, "If you want a gadget, get a GPS."Complex Choice: Any security you cannot easily sell or redeem for cash, including limited partnerships, non-traded real estate investment trusts, hedge funds and any instrument that isn't priced every business day. Simple Solution: Today, virtually every kind of investment comes in a form that is liquid and easy to trade. Use royalty trusts to invest in energy, regular REITs for real estate, and ETFs or mutual funds for commodities. Complex Choice: Aggressive funds with edgy derivatives strategies. The cost of failure overwhelms any benefit. For instance, Rochester Fund Municipals misused "inverse floaters" and lost an outrageous 31% in 2008. Simple Solution: Most funds either don't use or are severely restricted in their use of options, futures, swaps, and structured or synthetic investments. Fund documents will tell you what's permitted. If you don't understand, don't invest. Advertisement Complex Choice: Trading in advance of key economic news, Federal Reserve meetings or corporate earnings reports. You can profit if you guess right, but you'll get cooked if you're wrong because knee-jerk sellers will go on a rampage. Simple Solution: Regular, disciplined investing and rebalancing. Instead of banking on a string of brilliant trades, contribute to your funds or accumulate shares at the start of each month or quarter. You'll catch all the good news. Complex Choice: Chasing extra return on CDs or annuities with gimmicks that link the yield to a stock index. The formulas that determine what these indexed investments earn are inscrutable. Plus, these products are notorious for high fees. Simple Solution: Decide how much you want to put into different asset classes and assemble the appropriate stocks, bonds, funds and cash instruments. Or use a balanced fund to invest for growth and income at the same time. Advertisement Complex Choice: Overdesigning a portfolio to cover every bit of the "style box." If you insist on having mid-cap growth and intermediate Treasuries and emerging markets and all those other slices of the markets, you'll have 29 funds. Simple Solution: Start with an objective -- say, moderate growth with good dividend income as a cushion -- and find suitable funds (the Kiplinger 25 is a good starting place for your search). Complex Choice: When it comes to income, yield and distribution rate are not the same. Some closed-end funds, REITs and some stocks sport high yields, but they're paying you out of existing capital, not current earnings and cash flow. Simple Solution: If you're after secure income, see that interest and dividends are covered by earnings or cash flow. Only then can you be sure that a bond, fund, REIT or master limited partnership honestly "yields" 4% or 6% or 8%.