Tag: FOMO

The fear of missing out is real in many aspects of our lives. Today more than ever, with how ingrained social media is in our society, it’s hard not to let that fear, or FOMO, affect how you think and feel about your own decisions.

FOMO impacts all of us. I see it everywhere, and in almost everyone—from my 11-year-old twins when they hang out with their different groups of friends, to my clients who question if they just missed out on the next best investment.

I can admit I’m guilty of it myself, and I work to stay aware of this fear. For me, it comes up when I look at Bitcoin and think, why didn’t I just buy a few coins to try it out? Or when I read the latest headlines and wonder, why didn’t I buy some Tesla shares years ago?

We can’t get rid of these thoughts or feelings, those worries or fears that we missed out on what everyone else is enjoying or doing right. What we can and should do, however, is learn to recognize FOMO when it pops up for us—especially in the realm of our money and our investments.

Investing Is About Managing Money and Emotions

When many people think of investing, they assume the focus is on the analytical side of things. But for individuals, their investment experience is often defined not by numbers or statistics or data points, but by their own emotions.

One of the biggest emotions investors experience is fear. Fear of missing out on something, be that “the next Apple” or the market timing to avoid a future dip, is very real.

It’s also a very compelling feeling. Investing FOMO can be difficult to simply ignore it in favor of sticking to a rational, strategic investment plan.

Again, you don’t need to get rid of all fears of potentially missing out. What you do have to learn is how to handle FOMO when it tries to influence your investment decisions.

Learn more about how behavior can cloud your investing focus in Episode 9 of The Build below!

Awareness Is a Key Tool in Combating Investing FOMO

The best way to put the breaks on investing FOMO—or at least, to not let it make your decisions for you—is to be aware.

First, when you feel FOMO creeping up, simply acknowledge it. It’s completely normal to feel this way. It’s not necessarily a sign that you need to take action.

Investing FOMO can be so powerful because none of us wants to make a big mistake with our money that will cost us an opportunity to grow wealth or have enough in assets in the future to support our families and enjoy the life we want.

It helps to understand you will probably always have that worry, no matter what you do. Even if I buy Bitcoin or Tesla, there will still be some other stock or investment out there that will grab headlines and leave me thinking, “why didn’t I buy that instead?”

Second, work on getting to know yourself. For example, I know myself well enough that I don’t have the stomach to hold individual, concentrated positions. I’d always be tempted to sell out of my shares for fear of the price dropping (which is exactly what I did with Amazon back in 2012).

By the Time You’re Reading About It, It’s Probably Too Late

A third helpful way to manage investing FOMO is to understand how the financial news works. The headlines you see are inherently going to be:

• About something that is already in motion (meaning, you are not going to get the inside scoop on a great investment in the news; other investors already beat you to it)
• About anomalies and outliers; it’s news because it’s not normal!

Take the Gamestop story that cropped up in early 2021. If you read about the rally in the Wall Street Journal and wanted to buy in to assuage your feelings of FOMO, it was probably too late. You might have been one of the investors who bought at the peak and got left holding the bag when the stock plummeted shortly thereafter.

The story itself was highly unusual. That’s exactly why it made the news in the first place! That’s likely the case for any sensationalized investment that “everyone” is talking about: it’s an outlier, and outliers are very difficult to spot without the benefit of hindsight.

Another thing to consider is what you don’t hear about in the news (or in people’s normal, everyday conversations, for that matter). People will always brag about their winners. But they almost never talk about the bad trades and financial mistakes they have made.

Anyone who brags about a homerun investment has definitely struck out multiple times on other investments—whether they tell you about them or not.

FOMO Hurts, But Boring Really Is Better

There’s no denying the fact that the fear of missing out is painful. FOMO isn’t fun to experience. It can be agonizing to wonder if you’re the only one who isn’t getting rich for the latest fashionable investment trend.

If nothing else, know this: your worries are not representative of reality for a number of reasons. For one, it’s easy to feel like everyone but you are benefitting. But in reality?

The number of people who hold Bitcoin is tiny compared to the global market of investors. The number of people who made money off of Gamestop may be the hundreds or even thousands – but it’s probably not more than that, which is nothing when you consider the millions of people who are just investors in America.

And two, it’s the boring stuff that works! There are no reliable “get-rich-quick” schemes. But maintaining a portfolio of low-cost, globally-diversified mutual funds and ETFs and taking advantage of strategies like dollar cost averaging and dividend reinvestment will help you build assets over time.

You can know all of this, and still have FOMO. That’s okay to feel the fear of missing out. What you want to learn to avoid is taking action on that fear because, in all likelihood, it’s unfounded.

Don’t give in and chase the next hot investment. Feel the fear—and stick to your investment strategy anyway.