Editor's note: Are you doing all you can to excel as an investor?

You're on the right path if you read the Digest and other Stansberry Research newsletters. But chances are, you still haven't mastered everything you need to know to maximize your returns.

To help with that, we're sharing some classic advice from our colleague and Extreme Value editor Dan Ferris in this weekend's Masters Series that will increase your odds of success...

Today's edition is adapted from a pair of essays that previously ran in our free DailyWealth e-letter in August 2015 and November 2017, respectively. In it, Dan details how a conventional strategy could ruin your retirement... explains what to do instead... and warns against making another common mistake that could wreck your financial well-being...

Don't Let These Two Common Mistakes Lead You to Financial Ruin

By Dan Ferris, editor, Extreme Value

The traditional notion of retirement says you should take bigger risks in the stock market when you're young.

You have more time to make up for losses than when you're older. As you age, you should take fewer and fewer risks, so you won't lose your retirement money... so the conventional wisdom goes.

This well-worn strategy is called "Glidepath investing." And it could ruin your retirement.

Let me explain...

The emotional appeal of Glidepath investing is obvious. Young people feel like they're going to live forever, so it feels better to them to take more risks. Buying riskier stocks feels right.

Older people feel they have more to lose and might not be able to support themselves one day, so they tend to be more risk-averse. For them, buying fewer stocks and more bonds feels safer.

There's an army of financial planners and other "helpers" out there selling products designed to get you to retirement with a big, safe nest egg, based on this feel-good notion.

However, research suggests that what feels good isn't necessarily what you should do...

Investor and researcher Rob Arnott of Research Affiliates published a report in 2012 called "The Glidepath Illusion." Arnott's research suggests Glidepath investing will make you less money by leading you to put less money in higher-return investments (stocks).

Arnott studied 141 years of stock and bond returns from 1871 to 2011. From these data, he hypothesized a range of possible outcomes. In general, Arnott found evidence that the range of outcomes from doing the opposite of Glidepath investing was superior to the range of Glidepath-based outcomes.

It's well-documented that stocks outperform bonds over the long term. Glidepath investors wind up putting a bigger percentage of their assets in stocks when they're younger and have less to invest. They put a higher percentage into bonds when they're older and have more to invest.

That's the basic error. Investors put fewer dollars into higher-return investments, then interrupt the compounding process to put more dollars into lower-return investments. So they make lower returns than if they had done the opposite of Glidepath investing.

Glidepath investing is a good recipe for feeling good, but a poor one for making as much money as possible in stocks and bonds. Arnott's conclusion is worth quoting and keeping close at hand as a reminder...

Investors who are prepared to save aggressively, spend cautiously, and work a few years longer (because we're living longer) will be fine. Those who do not follow this course are likely to suffer grievous disappointment... No strategy can make up for inadequate savings or premature retirement.

Save aggressively. Spend cautiously. Let your investments compound as long as possible before drawing them down.

Now that's sound advice.

Sadly, it makes perfect sense that the financial-services industry is once again doing exactly the wrong thing for clients. Don't trust financial planners and brokers... They're commissioned salespeople. They're incentivized to sell investments, NOT to make you money in stocks and bonds.

For as long as my health holds out, I'll stay productive and hopefully get well-compensated for my efforts, saving aggressively and spending cautiously.

I recommend you at least give the traditional notion of retirement a second thought and consider an alternative that'll leave you better off emotionally and financially.

And this isn't the only common mistake that can lead you to financial ruin... or worse.

When I met Karl Hill in April 2007 at the Grant's Interest Rate Observer Conference in New York City, he was in his late 70s.

We spoke briefly after his presentation. His stooped posture, rumpled suit, and southern drawl disguised a deep, well-read, highly curious intellect.

Hill led a storied and accomplished life. But he missed one thing – a classic mistake that gets investors into the worst trouble...

By age 39, Hill had presided as the editor of Boston's Beacon Press, done foreign-management consulting, and even clocked two years with the U.S. Department of Housing and Urban Development before entering a successful career in banking.

Eventually, disappointed with the banking business, Hill looked to the stock market...

He invested $2.9 million of his own and other people's money, starting in 2000. And by the time he stood before us onstage in New York City, he'd turned that nearly $3 million into $54 million in seven years, a spectacular performance. As Hill told the audience...

In 2000-2001, with the public temporarily disillusioned with the stock market, and [Alan] Greenspan putting the pedal to the metal in ballooning the money supply with low-interest credit, I surmised that the public would put much of this inflated money into houses. I invested heavily in homebuilders, took big gains, and got out entirely in 2005-2006.

After exiting housing more or less at its top, Hill went whole hog into small-cap Canadian mining stocks due to "the ascendancy of real things from underground [gold, silver, oil and gas, base metals, and uranium] due to the overprinting of fiat money," which he characterized in his Grant's presentation as "the most certain thing in the world today" and "in its infancy."

Hill told the audience, "I can't pick stocks." A page from one of his conference handouts was titled, "Big Gains From Tiny Stocks, Selected Randomly Without Knowing Much About Them." Hill invested in stocks based on three premises...

1. Most security analysis and due diligence is futile, and stock prices are erratic and unpredictable.

2. Small stocks do better, on average, than bigger stocks.

3. Stock prices tend to move together for different industries.

Hill put these three premises together and wound up buying equal-sized positions in hundreds of the smallest-cap stocks in what he called "the most propitious industry."

That's how he made so much money in housing stocks. And he planned to do the same with mining stocks.

He had multiplied his own and others' money more than 18-fold in less than a decade. It all seemed so simple and powerful. Hill riveted the audience at the Grant's conference, as only the combination of a good story and a stellar track record can do.

Hill spoke as though his success in mining was as certain as his past success in housing. But it was not to be...

He failed to understand that the extremely risky, highly cyclical nature of the mining business trumps macro forecasting and the constant decline in value of paper money. In fact, forecasting is generally the province of fools – though I'd never call such a brilliant, warm, engaging fellow a "fool."

Hill was a philosopher whose philosophy about fiat money and its relationship to gold and gold stocks led him to ruin...

Five months after Hill's talk at the Grant's conference, the stock market peaked in October 2007. Gold stocks peaked four months later. The market crashed in 2008, ruining lots of folks, including those who – like Hill – had big money in small mining stocks. The VanEck Vectors Gold Miners Fund (GDX) fell 60% from its February 2008 peak to its October 2008 bottom.

At the conference in 2007, Hill handed out Xerox copies of his brokerage statements detailing the huge gains he'd made, including the performance of individual equities, amounts invested, and buy and sell dates. At the time, it was almost charming. Looking back, it was naïve and tinged with hubris.

The numbers on Hill's 2008 losses weren't published anywhere as far as I know, but they were ruinous enough. Despondent over losing his own and others' money (and possibly under the weight of a hereditary suicidal tendency), Hill shot and killed himself on October 25, 2008 at age 79. Had he merely held on, it's likely Hill would have made it all back in a year, and even more in another two years, judging by the performance of the big mining exchange-traded funds.

Hill believed gold stocks were a multiyear, one-way bet straight up that even an unfolding financial crisis couldn't stop... based solely upon a top-down thesis he viewed as "the most certain thing in the world."

That was his mistake. Overconfidence leads to a lack of imagination. And an investor without imagination can't see risk until after the damage is done.

Today, you can find other trades that will ruin investors like mining ruined Karl Hill. To avoid them, remember his story – and never fall in love with your macro predictions.

This is what distinguishes a great investor from yet another lucky guy with a great track record and a lot of money... walking straight into ruin.

Good investing,

Dan Ferris

Editor's note: In the early days of his investing career, Dan made a critical mistake that left him broke... with just $268 to his name. But now, he lives in a mansion in Washington and has everything he'd ever want... luxury cars, a music room full of guitars, and more.

It's all thanks to a secret that Dan discovered 24 years ago. Until now, he has never talked publicly about how he started out as an investor, so that's worth your time alone...

And even better, Dan believes this same lesson could lead investors today to a 1,550% gain in one of the best businesses on Earth. Learn more in Dan's FREE presentation right here.