Two horror stories, one conventional, one not.
Some years ago my mother inherited about $80k, which was a substantial sum for her. Kids were grown and gone, she was on a good path to retirement (nice government pension), and she had no experience investing, nor did anyone in her family. She heard a Jim Kramer type touting a potential breakthru stock -- a startup by a few doctors and scientists who thought they were on the verge of an HIV direct test (at the time, the only test was for antibodies, and so you had to be infected for weeks or months to show positive). If they'd have succeeded, they would be billionaires. She dropped the who $80k on this. Her logic was that if she invested it in CDs, which was about all she knew about, it wouldn't change her life much, but if this money quadrupled, then she could shower the rest of the family with shared wealth. Once the stock started to drop, she fell into the sunk-cost fallacy, and rode it all the way down to zero. There were a couple of upsides. One, she had investment losses to use for her taxable investment gains for the rest of her life, and two, she learned to invest much more thoughtfully. I could never get her into index funds, but she did later invest heavily and successfully in P&G and a local utility, both of which produced a nice dividend stream every year.
During the early-mid 2000's, a coworker had a family friend who thought he was an investment whiz. My friend gave him $10k to invest. He was trading options. He made about a half a dozen all-in successful moves, and just before the holidays my friend told me he was up to $400k! I about fainted, and suggested he cash half of it out and buy a house (which in those days was possible). He said he'd tried that, but the investment whiz got angry at the mistrust, and convinced him to leave it alone until he could get it up to at least a million dollars. Of course the next trade resulted in the complete loss of all the money, as happens with options. My friend at first wasn't too upset, because he'd never really had the money, and he could afford to lose $10k.
Then he got the tax bill. You see, the $400k in short-term capital gains had been in one tax year, while the one bad trade had occurred in early January of the next year. My friend was stuck with a six-figure tax bill, and the IRS garnished his wages for the next 6 or 8 years. The investment whiz fled the country to avoid his even larger tax bill.