CNBC Digital presents the first in a series of five articles on worst-case financial scenarios affecting clients in four age brackets: millennials and younger Gen Xers; people in their 40s and 50s; 60-somethings and pre-retirees; and those already in retirement. CNBC.com editor Eric Rosenbaum kicks off the series with an overview of worst-case scenarios and the missteps that lead to them. Look for further installments from members of the CNBC Digital Financial Advisors Council in coming weeks.
It takes money to make money, but it also takes money to lose it—sometimes a lot of it—and all too often at the wrong moments in life.
"Overconfidence is the precursor to the biggest mistakes made by investors of any age," said certified financial planner Tim Maurer, director of personal finance at the BAM Alliance.
Overconfidence, often couched in willful ignorance or hopeful naivety, can lead to overly aggressive, disastrous ends. Overestimation of intelligence is part of the problem, said Wayne von Borstel, certified financial planner and founder of von Borstel & Associates. More than half of Americans will tell you they are above average in intelligence, meaning the average American thinks he or she is smarter than the rest of the population, according to a recent study.