“When I turned 18 I took over an account earned for college without my parents' knowledge, submitted all the necessary forms to move it into my own name and started to day trade. It was during the tech bubble, and I turned my college savings account, which would have paid for at least two years of schooling, into enough to pay for books. From that moment on I knew I wanted to learn more about investing and how to present others from making the same mistake that I had made.” — Ryan Marshall, Ela Financial Group, Wykoff, New Jersey
“Back in 2001, I thought I was a ‘genius’ to buy Enron at $4 as I ‘thought’ I knew the company (I was an Arthur Andersen auditor in the early 1990s). I thought it was a “no brainer” that the stock would go higher ... how could it fail? I have a stock certificate in my office on the wall to remind me to NEVER buy a stock based on its history (or per my gut) without research.” — Scott Bishop, STA Wealth, Houston
“With a friend from college, I founded a fitness backpack company, Fit Factory Gear. We designed the backpack [a gym bag in backpack form], developed relationships for the supply chain to have it made in China and delivered in the U.S., did all the sales events and pre-sales to raise capital (in addition to money from our own pockets). We were ready to go when delays hit: production snags … and workers at the Long Beach Port went on strike ... We could never really recover from the loss of momentum and decided to shut it down at the end of 2020.” — Dan Herron, Elemental Wealth Advisors, San Luis Obispo, California
“Under Armour. I used the logic that kids and families wear tons of this stuff and they had landed the MLB (major league baseball) deal. After they paid the C shares out as a dividend [I thought] it would be a good time to buy. Not so much. The only thing that was comforting was during a class in grad school when I mentioned this as my worst pick ever, one of my friends who happened to be a bond manager said she had been burned by the bonds too.” — Mike Molitoris, Flagship Wealth Management Group, Cary, North Carolina
“It was very early March 2009, in the throngs of the Great Recession … the stock market looked as though it had no bottom. My client was a very successful and wealthy business owner whose … advisors had carefully crafted a complex wealth transfer plan for his blended family … The day before the market bottomed out he insisted we liquidate all of the trust accounts because he had lost his nerve and couldn’t sleep. We tried every way possible to help him understand this was one of the very risks the plan was meant to mitigate...We were unsuccessful. He and his heirs missed out on the best years of the longest bull market in our history.” — John McGowan, Mandala Financial Advisors, Des Moines, Iowa

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“An elderly couple came to me with a portfolio 100% invested in distressed muni bonds from Puerto Rico. They suffered devastating losses before we started working together and had to slash their spending.” — Jennifer Mulder, Pathway Financial Services, Los Angeles
“A new client came to me four years ago with a portfolio of risky microcap stocks that his previous ‘advisor’ had purchased for him. I couldn’t convince him to part with one in particular, a microcap biotech stock that was a ‘one trick pony’ in terms of drugs in development. ... The client had bought it at $4 a share. I told him to sell and cut his losses, as the price was down to $0.55 a share … He refused … said he would kick himself if it went up. Today the shares are down 97% from his original purchase price… This cost him $50K in losses, which he can’t even realize on his taxes because the shares are in retirement accounts.” — George R. Gagliardi, Coromandel Wealth Management, Lexington, Massachusetts
“While not a client at the time, this person was under the impression they had an active Roth IRA but this was not the case. They had opened up the account and made a deposit but were unaware there were still a few more steps to take. They had not made any investment selections and the money was sitting there much like a saving account. Luckily this mistake was caught quickly, but it could have been detrimental to their goals if the money was never invested once it was deposited.” — Treyton DeVore, Piertree Planning, Kansas City, Missouri
“Clients typically come to me owning various kinds of accounts — taxable, pre-tax retirement accounts (traditional IRAs) and post-tax retirement accounts (Roth IRAs) and they own the same securities in each account … It’s better to own tax-inefficient investments that throw off a lot of taxable income in retirement plan accounts. Same goes for assets that have higher expected returns — stocks over bonds. Put the more tax efficient and lower yielding assets in taxable accounts. They end up with the same desired investment strategy but are better positioned tax-wise.” — Jane Newton, RegentAtlantic, Morristown, New Jersey, and New York
“My clients invested in a residential home with the initial goal to renovate and flip the property quickly … A little before the local real estate market was hit by the Great Recession of ‘08. They still owned the property when I met them in 2012. They were young, just started having children and the husband was starting his own business ... Instead of having a windfall of cash … they had to keep the property and find renters until they could sell it to minimize losses. The husband became a real estate agent three years ago to compliment the first business.” — Paul Holman, Waterside Financial Group, Norfolk, Virginia

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(Related: 16 Big Estate Planning Mistakes Clients Make: Advisors’ Advice)

Investment mistakes are par for the course for anyone putting money into financial markets, but like most mistakes they can be valuable, serving as a red-flag warning or a lesson for the future.

We asked financial advisors about the worst investing mistakes they or their clients have ever made.

The biggest mistakes can be the best reminders of what not to do, which is why Scott Bishop, executive vice president of financial planning at STA Wealth Management, keeps an Enron stock certificate on his office wall to remind him “to never buy a stock based on its history or on his gut without doing the necessary research.”

Check out the gallery to read about the biggest investing mistakes made by advisors and clients.

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