Warren Buffett’s investment advice is like an heirloom cashmere sweater, it rarely goes out of style. When the billionaire shares lessons from his decades-long career, people tend to listen — not only because of his success, but because he’s usually willing to explain how he thinks.
In one past speaking engagement, an audience member asked him a surprisingly vulnerable question: “What would you consider to be the worst investment you’ve ever made?”
Buffett didn’t hesitate.
“The worst investment I ever made? The biggest mistakes are the ones that actually don’t show up,” he said. “They’re the mistakes of omission rather than commission.”
He went on to explain that Berkshire Hathaway has “never lost that much money on any one investment.” But it has missed out on enormous gains because he didn’t act when he should have.
“We have missed profits of maybe $10 billion in things that I knew enough to do, and I didn’t do,” the Oracle of Omaha explained (1).
Buffett’s point is simple: Sometimes the most expensive investing mistakes aren’t the bad bets you make, but the good ones you never take.
Buffett noted that Berkshire Hathaway has never suffered truly catastrophic losses from the investments it actually made. In his view, those “mistakes of commission” — the bets you take that don’t work out — are rarely the most costly. That’s partly because experienced investors usually size their risks, diversify and quickly learn from errors (2).
Sometimes, being cautious is the right move. When you’re new to investing, or still figuring out your risk tolerance, protecting your capital matters more than chasing huge wins. A few small missteps won’t ruin your future if you’re playing a long game.
For decades, Buffett has recommended that most people invest in broad, low-cost index funds rather than trying to pick individual stocks (3). In the U.S., he often cites the S&P 500. The Canadian equivalent would be a low-fee fund that tracks the TSX Composite INdex, a global equity index or a mix of both through an ETF (4).
For new or risk-averse investors, this approach avoids the emotional whiplash that comes with speculative assets. Watching a volatile investment — whether tech stocks, crypto or thematic plays — plunge 30% in a week can tempt even disciplined investors to sell at the worst possible time. Once you panic-sell, the loss becomes real (5).
Buffett’s slow and steady philosophy helps avoid that trap. If your portfolio is diversified and built for the long term, you don’t have to watch it every day (6). And more importantly, you don’t have to put yourself in a position where you’re forced to sell just to sleep better at night.
Read more: Keeping over this amount of cash in your bank account is a serious mistake — how much do you have stashed in there?
As investors gain experience and confidence, they often start to consider opportunities that felt too risky early on. Buffett admits even with the capital, knowledge and staying power to weather a loss, he still passed on some opportunities, and those “missed profits,” in his own words, added up to billions.
For most people, that’s a reminder that caution can be costly. Playing it safe can protect you when you’re learning, but once you understand how markets work, refusing to act can hold back your long-term returns.
Buffett’s point isn’t that everyone should suddenly chase risky assets. It’s that risk feels different when you fully understand what you’re investing in. Getting to that point takes time — research, repetition and exposure to how markets move.
For many Canadians, this means starting with broad, low-cost index funds, then gradually adding other investments once you understand how they fit into a diversified portfolio. It’s a way to build both financial and psychological resilience before taking bigger swings.
One interesting omission Buffett acknowledges is the real estate market. When asked at a recent Berkshire Hathaway meeting why he prefers stocks over property, he replied:
“There’s just so much more opportunity, at least in the United States, that presents itself in the security market than in real estate (7).”
He added that real estate can feel like a second job, requiring more hands-on work than most stock investing (8). For Canadians, it’s a similar calculation: rental property can be profitable, but it demands time, maintenance, tenant management and capital — all factors investors should honestly weigh before jumping in.
If you’re not willing, or financially unable, to purchase a rental property, there are other passive real estate investment strategies that can still tap into great earnings potential.
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Invest in real estate crowdfunding platforms: Real estate crowdfunding allows investors to pool their money to invest in larger projects without the need for direct property ownership. Platforms connect investors with developers looking to fund residential and commercial properties. This passive approach lets you benefit from real estate appreciation and rental income without the responsibilities of property management.
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Generate passive income with REITs: A Real Estate Investment Trust (REIT) allows you to invest in real estate without buying property. REITs own and operate a range of commercial and residential properties, including office buildings, apartments, hospitals, and shopping centres. Investors earn returns through dividends and potential price appreciation.
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Buy commercial real estate for long-term growth: Investing in commercial properties—such as office buildings, retail spaces, or industrial facilities—can generate steady rental income and long-term appreciation. While commercial real estate typically requires more capital and expertise than residential investments, it also offers higher returns. Investors can buy commercial properties outright, join a commercial real estate fund, or invest through a REIT specializing in commercial assets.
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Take the high-risk high-reward with private mortgages: With private mortgages, you essentially become the bank. You loan your money to a homeowner just like the bank would. A borrower might seek out a private mortgage because they don’t qualify at one of the big banks, perhaps due to a bruised credit score or a low income. The easiest way to find prospective borrowers and loan out your funds is with the services of a mortgage broker.
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Get in (and out of) the condo game with pre-sale condo assignments: A pre-sale condo assignment is when you, the investor/buyer, sell your rights to a completed condo to another buyer before the condo is complete. It’s called an “assignment” because you sign your rights to the new buyer. Condo assignments tend to be popular in hot real estate markets like Toronto and Vancouver where home prices appreciate faster than the rest of Canada.
As Buffett says, the biggest risk is investing in something you don’t understand. That’s true whether you’re considering individual stocks, rental property, crypto or thematic funds (9). Learning from credible sources — and speaking to a qualified advisor when needed — can help you avoid both kinds of mistakes: the losses you take, and the opportunities you avoid out of uncertainty.
Warren Buffett’s rare investing mistakes weren’t reckless bets that went wrong — they were opportunities he understood and didn’t take. Early on, playing it safe helps you build confidence and avoid panic-selling. But as you learn more, caution can become expensive.
The real investment skill is knowing when you understand an investment well enough to take action. If you’re unsure, keep learning — or get professional advice. When you find an investment you genuinely understand and can stick with through periods of volatility, you’ll also learn that hesitation may be the most expensive mistake of all.
– With files from Melanie Huddart
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
YouTube (1, 8); Berkshire Hathaway (2, 3); Vanguard (4); The White Coat Investor (5); CNBC (6, 7); U.S. News (9)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.