We’ve all made mistakes in our lives from time to time. Some mistakes are minor and are easily recovered from, while others are more difficult. Some mistakes are just plain silly and we can look back someday and laugh at ourselves.
 

I’ve made my fair share of mistakes, like the $263K investment mistakes that I wrote about a while ago. However, those were expensive investment lessons that provided me with great returns and knowledge that I will never be able to buy without actual experience. In a way, I am glad that I made those investment mistakes early in my life and hope that I will never repeat them again.
 

For today’s post, I thought that I would share five of the worst investment mistakes that I’ve come across in the personal finance world. Spoiler alert, one of those worst investment mistakes was yours truly’s. After reading about them, I hope that you can learn from it and avoid them at all cost.

Mortgaging Your House To Start A Bitcoin Mining Operation

2017 was the year of cryptocurrencies. During the second half of 2017, there was not a day that went by that I didn’t hear any news about Bitcoin. It was not that long ago that one Bitcoin only traded for pennies against the USD. At the peak, one Bitcoin traded close to $20,000 USD. Some of the early investors made millions and everyone wanted to jump on the cryptocurrencies bandwagon.
 

Most people who wanted to join the cryptocurrency euphoria would just bet a portion of their savings or allocate some play money that they can afford to lose. For this Vancouver, British Columbia couple, they bet their whole livelihood by mortgaging their house to fund their Bitcoin mining operation.
 

If they hit the jackpot, this bet can pay off quite handsomely. However, the latest price of Bitcoin as of June 14, 2018 was about $6,626 USD per Bitcoin, a drop of about 65% from its high just six months ago. So in my opinion, betting your home on something as volatile as Bitcoin is just foolish and one of the worst investment mistakes that one can make.

Borrowing From Your Credit Card To Gamble

From time to time, I tried to time the market by selling naked put options when the price of a stock is down or covered call options when a stock is up. In a way, I am making a bet in the direction of the security that I sold the options. However, the bets that I made were only a small portion of my portfolio and I often have time working on my side.
 

For the next candidate on our list of the worst investment mistakes is a financial analyst from Vancouver, British Columbia. This 24-year-old had been able to successfully predicted the direction of a few market indeces and made some decent profits making his bets.
 

One day, he noticed the Dow Jones Industrial Average plunging and he started borrowing $10,000 from his credit card to bet that the index will recover pretty quickly. Suffice to say, the index did not recover the next day. In fact, it drops, even more, the next couple of days.
 

The result of this bet is a total wiped out of his $10,000 credit card loan. In my opinion, if you are going to gamble, only bet what you can afford to lose and never gamble with money borrowed from your credit card. For this type of predictions, you can be correct 9 out of 10 times, but when you are wrong on the tenth time, you end up with nothing. Hence, your high success rate usually means nothing.

Using Your Financial Aid To Buy Cryptocurrencies

Based on a recent poll by The Student Loan Report, about 21.1% of students admitted that they used part of their financial aid to invest in cryptocurrencies. Normally, I would agree that learning how to invest at an early age is a good thing. However, using funds that were supposed to be allocated for your education and future earning potential could be one of the worst investment mistakes that you can make.
 

If people want to learn how to invest at an early age, I would recommend they invest with the extra money that they have saved up instead of using their tuition money. In addition, Cryptocurrency or Bitcoin is more of a gamble than an investment if you ask me.

Accepting Bitcoin As Payment For Your Home

Earlier this year, when the price of Bitcoin was still close to it’s all-time high and housing sales were slowing, Realtors and Sellers became creative with marketing homes for sale. One seller was even opened to accepting Bitcoin payment for the purchase of their house.
 

I am not sure if that stunt was just to get publicity for the property or an investment plan that the homeowners had after they sold their property. I hope that the seller did not accept any Bitcoin offers. Otherwise, the homeowner’s proceed of sales would be worth half as much just in a couple of months.
 

If you haven’t noticed the message, it’s pretty obvious. Anytime you try to put your money in hot investments (like Bitcoin) that everyone is talking about, you’re pretty much gambling rather than investing. The faster an investment vehicle goes up, the pace of decline is even faster. It’s best to put your money in real assets (stocks, bonds, and real estate) that grows over time.

Using Your Credit Card To Cover Your Margin Account Short-Fall

Okay, if you have been wondering which of the worst investment mistakes belong to me, it’s this one. Yes, I did make this mistake and I am willing to face my critics if anyone has any feedback for me. It’s definitely not something that I am proud to admit. However, a mistake is a mistake. Hopefully, by sharing this with you, I hope that it’ll help you to become a better investor and to avoid making the same mistake as me.
 

I made this mistake way back in early 2009 during the worst financial crisis that ever occurred. I was just starting to learn how to invest. I was using a margin account and I did not have any emergency or access to funds. When my stock portfolio dropped, I was buying more, but I did not have the cash to cover my shortfalls when my stocks dropped significantly.
 

At one point, I did not have any money to cover my shortfall. All I had left was a couple of credit cards to borrow some cash to cover the shortfall. That was my desperate and last resort to save my bacon and to avoid a total loss of my investments. Fortunately, the market bottomed out around early March of 2009 and I was able to escape financial disaster shortly after.
 

From that experience, I started to build as much access to funds as I can and would not let my buying power slipped below $100K. As my portfolio grew, I increased the buying power threshold that I need to maintain. I would definitely do everything that I can to avoid another margin call in my lifetime.

My Two Cents

Some people think that certain investments are great because they have the potential to provide a phenomenal return in a short period of time. Usually, these types of investments are more of a gamble rather than a real investment.
It’s be to invest in assets that have a history of making profits and growth over the long-term.
 

So readers, what were some of the worst investment mistakes that you’ve ever made? Do you know of any investment mistakes that you think that this community should avoid?