Drawing on the hard-earned wisdom from their own missteps, we’ve gathered personal lessons from CEOs and business leaders to guide your wealth management strategies. From persisting through market crashes to conducting thorough research before investing, explore the valuable insights shared in these eleven candid responses to the lessons learned from failed investments.

  • Persist Through Market Crashes
  • Learn from Startup Failures
  • Embrace Diversification and Research
  • Invest Beyond Emotions
  • Educate Before Speculating
  • Never Underestimate Liquidity
  • Stay True to Core Values
  • Avoid Trendy, Unproven Investments
  • Prioritize Due Diligence and Diversification
  • Refine Real Estate Investment Strategies
  • Conduct Thorough Research Before Investing

Persist Through Market Crashes

I have been investing for over 20 years, and although most of the time it was successful, there were a few hurdles here and there. Witnessing the crash of 2008, I thought that I would never come back to investment, as I was a much younger entrepreneur back then. But one of my mentors told me that crashes do happen, but in the long run, they will not impact the portfolio significantly.

Many investors backed out with huge losses because they got scared and overreacted. Those who kept their hand on the pulse but didn’t take a step back soon started rebounding, and this was the most important lesson for me: to be persistent and not overreact when something goes wrong. With a diverse portfolio, even if a crash happens, sticking with your plan and being persistent will pay off in the long run.

Holly AndrewsHolly Andrews
Managing Director, KIS Finance

Learn from Startup Failures

I’ve had my share of failures, and each one has taught me something valuable. One big lesson came from an early investment I made in a tech startup. It seemed like a great opportunity—they had a solid idea and a passionate team. However, I didn’t dig deep enough into their financials and business model.

Within a year, the startup ran into serious cash flow problems and eventually went under. It was a tough experience, but it taught me the importance of doing thorough research before investing. At Leverage, we now have a much more detailed vetting process. We look closely at financial health, market potential, and scalability before committing any funds. For instance, before investing in a new fintech company, we spent weeks analyzing their financial statements and understanding their revenue streams. This careful approach has helped us avoid similar mistakes and make more successful investments.

This experience also highlighted the importance of diversification. Back then, I had put too much money into one venture. Now, I make sure our investment portfolio at Leverage is well-diversified across different sectors and asset classes. This helps reduce risk and ensures more stable returns.

My advice to others is simple: always do your homework and diversify your investments. These practices can help protect your wealth and provide more consistent growth over time.

Rhett StubbendeckRhett Stubbendeck
CEO & Co-Founder, Leverage Planning

Embrace Diversification and Research

One of the most impactful lessons I’ve learned from a failed investment relates to the importance of diversification and thorough research. Several years ago, I invested a significant portion of my portfolio in a single technology startup. It turned out that the market was not as receptive to their product as anticipated, and the management team struggled to adapt. The startup eventually declared bankruptcy, and my investment was wiped out. It reinforced the importance of diversification, thorough research, risk assessment, and regular monitoring. These principles have become the cornerstone of my approach to wealth management, helping me to make more informed and balanced investment decisions.

John HillJohn Hill
Wealth Manager, G2 Petroleum

Invest Beyond Emotions

A significant lesson I gleaned from a failed investment is to never invest based solely on emotions. We tend to get excited about potential gains and often overlook the risks associated with an investment. This was exactly what happened when I invested in a start-up company that promised high returns in a short period of time.

Despite doing my due diligence, I let my emotions take over and invested a large sum of money in the company without fully understanding the business model and potential risks involved. Unfortunately, the company faced financial difficulties and eventually went bankrupt, resulting in me losing all of my investment.

This experience taught me the importance of researching and understanding an investment before making a decision. It also made me realize the significance of diversification in my portfolio to minimize potential losses.

As a result, I have become more cautious and analytical when it comes to investing, always considering both the potential returns and risks involved. I have also spread out my investments across different industries and asset classes to reduce the impact of any single failure on my overall wealth.

Brandon BeattyBrandon Beatty
Real Estate Investor, Ready House Buyer

Educate Before Speculating

My investment in cryptocurrency at the peak of its hype taught me a brutal lesson about market speculation. In the grip of FOMO (the fear of missing out syndrome), I played a fool’s game, adding to positions without adequately evaluating the market volatility or the technology. The subsequent crash led to financial loss, a clear consequence of poor preparation.

That experience made me appreciate the value of investing dollars in what you know and understand. For me now, part of that means ensuring I fully educate myself about any new asset class before putting money to work in it. It also means maintaining sufficient diversity in my portfolio to hedge losses on high-risk bets, which tends to moderate outcomes over time and doesn’t hurt. In other words, I’ve learned that financial success depends on disciplined research and diversification.

Mark McShaneMark McShane
Founder, Cupid Digital PR

Never Underestimate Liquidity

I want to share a personal story that has influenced my wealth management decisions.

A few years ago, I invested in a start-up without fully understanding the importance of liquidity. The business had potential, but I underestimated the cash-flow requirements and ended up with severe liquidity issues. I had to sell assets at a loss, and the investment failed.

This experience taught me the importance of having liquidity. Now, I always make sure a sufficient chunk of my assets is easily accessible to cover unexpected expenses and new opportunities. This has not only stabilized my financial situation but also allowed me to grow my business more sustainably.

Remember, never underestimate liquidity. Balance your portfolio with liquid assets, and you will ride out the storm, not get hit by one.

Lucas RiphagenLucas Riphagen
Co-Owner, TriActiveUSA

Stay True to Core Values

A few years back, I ventured into an investment that, frankly, fell short. As the owner of a vehicle rental company in the UK, I’ve always prided myself on being keen and calculated about where the business’s money goes. This time, however, the allure of quick returns got the better of me. I put a significant amount of capital into what promised to be a “revolutionary” tech addition to our fleet.

Sadly, it failed and didn’t appeal to our customers the way we expected. The failure was hard to accept, but it taught me lessons of thorough due diligence and the importance of staying true to our business’s core values and understanding. I’ve learned to be cautious with tech investments after realizing that not everything that seems valuable truly is.

Now, I focus on making small, customer-driven improvements that directly enhance our service’s value. This approach has helped us recover and grow more resilient and in tune with our market’s actual needs.

James McNallyJames McNally
Managing Director, SDVH [Self Drive Vehicle Hire]

Avoid Trendy, Unproven Investments

Failures are like those brutally honest friends who tell you spinach is stuck in your teeth. My most memorable lesson came from investing in a trendy tech startup that promised to revolutionize grocery shopping with drone delivery. Spoiler alert: it didn’t. The drones were more likely to deliver your groceries to your neighbor’s roof than your doorstep. This misadventure taught me the importance of thorough research and diversifying investments. Now, I look for solid track records and sustainable growth, not just flashy promises. Plus, I’ve learned to appreciate the value of good old-fashioned delivery trucks.

Phil LaboonPhil Laboon
CEO, Leadstacker

Prioritize Due Diligence and Diversification

Over my financial career, I have learned a lot from bad decisions that have greatly changed my attitude towards asset management. One particularly unforgettable incident included a speculative technology stock I bought during the dot-com explosion. At the time, careful due diligence was subordinated to market frenzy and projected growth. But the stock fell as the bubble burst, therefore causing a significant loss.

This encounter underlined the crucial need for thorough investigation and risk analysis in choosing investments. It showed me that following trends without a strong knowledge of underlying principles might cause major financial losses. I thus changed my investment plan to give diverse portfolios top priority, careful financial analysis top importance, and an emphasis on long-term value over transient market fluctuations.

Furthermore, the knowledge strengthened the need for disciplined portfolio management and risk-reducing techniques. To properly distribute risk, I started allocating funds among various asset classes and sectors. I also began more alertly observing market patterns and adjusting investments to maintain resilience against market volatility.

In the end, the knowledge gained from this lost investment has been rather helpful in improving my method of money management. It has ingrained in me a mindset that celebrates caution, informed, research-based decision-making, and a long-term view in navigating the complexities of the financial markets.

Russell GousRussell Gous
Editor, Money Transfers

Refine Real Estate Investment Strategies

One personal lesson I learned from a failed investment is when my company was flipping a property that we purchased at the end of December 2021. We purchased this property thinking it was a great flip opportunity; however, we messed up our analysis in a number of ways. We underestimated just how much renovation there would be to do, and we also had poor comparables for our after-repair value. When it came time to sell this property, we had a renovation budget $50,000 higher than what we had accounted for, the market had fallen, and we realized that the comparable properties were not truly comparable.

Through this lesson, we learned that we need to have a lot of equity on the buy when we’re buying real estate flip deals. The process that we put into motion was that now, every time we are strongly considering buying a property, we get opinions from two real estate agents as well as our own opinions to understand what the property is currently worth and what it could be worth when flipped. This new process has been instrumental in our wealth management decisions and has helped us to be more level-headed when making a real estate purchase.

Sebastian JaniaSebastian Jania
CEO, Ontario Property Buyers

Conduct Thorough Research Before Investing

Once, I invested my shares in a company that seemed promising and had become the talk of the town for a while. However, the company started to struggle with scaling issues, capital, and regulatory challenges in a short time. As the company closed down due to significant financial losses, I lost whatever I had invested. This failure taught me the importance of being diligent and not making decisions in haste. I now prioritize diversification in my investment portfolio and conduct thorough research before funding any organization. The lesson learned from my first experience has made me an informed investor and has helped me avoid identical pitfalls ever since.

Dhari AlabdulhadiDhari Alabdulhadi
CTO and Founder, Ubuy Netherlands