published 2023-01-21 13:00:00 3 Investment FOMO: How to Avoid Falling Victim to Hasty Financial Decisions /content/thumbnails/p-51-fomo-1-small.webp fomo We have all experienced FOMO at some point, whether related to a social event, a sale, or a new product that we did not want to miss. It's a powerful and pervasive feeling that can be difficult to control. But when you need to make financial decisions, you should use all of your willpower to resist it.

Investment FOMO: How to Avoid Falling Victim to Hasty Financial Decisions

Conquering the Fear: Navigating FOMO in the Investment World

Fear of missing out, or simply "FOMO" - the anxiety caused by the possibility of missing out on what others are doing, having, or achieving. We have all experienced this feeling at some point, whether related to a social event, a sale, or a new product that we did not want to miss.

It's a powerful and pervasive feeling that can be difficult to control. It shadows us as a constant companion in every situation. But when you need to make financial decisions, you should use all of your willpower to resist the urge to act impulsively. Joining the crowd with your financial decisions may provide temporary emotional relief, but succumbing to FOMO can ultimately leave you worse financially.

Know Your Triggers

FOMO is not just a trendy term that has recently surfaced in popular culture. Psychologists have studied and acknowledged this phenomenon for over a decade. The Oxford English Dictionary included it in 2013, a testament to its impact on our lives. Fortunately, various strategies and techniques can help you overcome this affliction. Identifying the triggers and taking control of your exposure to them can limit FOMO's influence on your financial decisions. Let's go over the most common ones.


In today's hyper-connected world, we have instant access to the lives and experiences of others. Social media and technology have made it easy for us to compare our own lives to the lives of others. We are bombarded with real-time updates of what others are doing, having, or achieving and feel pressured to keep up and not miss out on any experiences or opportunities.

The allure of overnight success is tempting. Everywhere you look, it seems like people are effortlessly going from living paycheck to paycheck to quitting their dead-end jobs and living a lavish lifestyle. The rise of teen influencers making millions with NFTs adds to the perception that getting rich is easy.

But, people tend to exaggerate their investment successes, downplay or hide their failures, and focus on creating a desirable image rather than sharing the whole truth. Influencers create a skewed perception of what is possible. This perception can lead to misguided investment decisions. Remember, what you see online is often a highly curated and edited version of reality.

It's easy to get caught up in the excitement and believe that our favorite athletes, entertainers, or social media influencers who promote various investments must know something we don't. But fame and success in one area don't necessarily translate to expertise in another. It's important to ask yourself, is this person truly capable of providing sound financial advice? Don't let fame or popularity influence your investment decisions - do your due diligence.

Conquering the Fear: Navigating FOMO in the Investment World


Another reason people are susceptible to FOMO is because of a natural tendency rooted in our desire for inclusion and belonging. We want to be a part of something and to have our decisions validated by those around us. People often fall into the trap of following the crowd, believing that if everyone else is doing something, it must be the right choice. This behavior can lead to decisions based on what they perceive as the norm rather than what is best for them.

The ease of online investing has led to an explosion of new and sometimes highly speculative investments, such as meme stocks, crypto-currencies, and NFTs. The trend of buying these types of assets is based on internet buzz rather than careful analysis, and the prices of these investments are often driven more by hype and emotions than by fundamentals.

Let's face it, it's easy to feel left out when everyone else seems to be making remarkable profits from their investments, and you're not. It's easy to fall into the trap of following the crowd and investing in what everyone else is talking about, even if it's something you wouldn't typically hold. Going against the grain can be uncomfortable. The fear of missing out on potential returns can make us second-guess our judgment, while safety in numbers may provide a false sense of security.

But the reassurance of not being alone in our choices if the positions don't perform as expected is a poor excuse for losing money. When FOMO and fear of regret collide, it can lead to haphazard investments. Without adequate research, we may blindly buy into assets without fully grasping their nature and go against our typical risk tolerance.

Just because the crowd is jumping on an investment opportunity doesn't mean you have to join them. Investing is a personal and individual journey. What works for others might not work for you. Remember, not every opportunity is a good fit for everyone.

Regret Aversion

We experience greater emotional impact from losses than equivalent gains, even if those losses are hypothetical.

FOMO triggers a well-documented behavioral bias known as regret aversion that can impact our decision-making.

Our brains constantly assess whether our current reality aligns with our desired state. When there is a discrepancy, we experience discomfort and tend to take quick action to close the gap. We seek out similar investment opportunities in the hope of identifying the next big move and avoiding potential regrets and being left on the sidelines. Or, we may jump into an investment when it is already overvalued and too late to reap the benefits.

One of the biggest mistakes in the industry is buying something after it has already experienced exceptional returns. Just because someone else made a significant profit on a particular investment does not mean you will have the same outcome. Past performance does not guarantee future returns.

Furthermore, buying a stock after its price has appreciated may mean taking on more risk. After all, you are spending more money to buy the same investment. Positions that rise the fastest are often the most susceptible to rapid declines. While buying something that has risen in price may appear to be a good idea, it could be overvalued and subject to correction, especially if the demand for the investment is based solely on investor hype.

Buying an asset without understanding what the business does, how it operates, and whether it's profitable or has debt is akin to gambling rather than investing.

How to Resist the Fear of Missing Out

Before following investment advice, evaluate the reliability of the source. If you can't verify the claims or credentials, or if they don't have extensive knowledge of the subject, it is best to proceed with caution or consider seeking advice from a more qualified source or professional.

Before committing your money, ensure you understand the investment. Don't base your decision solely on the asset's price or because everyone else says it's the next big thing. Learn what the company does, its debt situation, its profitability, and how this investment will earn money for you. Relying solely on the hope that the price of an asset will increase in the future is not a sound investment strategy.

FOMO often leads to the feeling of a limited window of opportunity and pressure to make a quick decision. Keep in mind that the best investments are those that remain to be attractive in the long term. Unless you plan on being a trader and selling your holdings shortly, it's best to avoid investments that are only a good buy for a short while.

What Should You Fear Missing Out?

However, there are certain things you should be afraid of missing out on. One of them is planning for your financial future by setting goals and devising a long-term savings and investment plan that aligns with those goals. Paying off high-interest credit card debt or other loans should also be a priority. And, let's not forget the power of compounding - procrastination can be costly in this case. The key is to put a plan in motion and stick to it for the long haul. Start planning now and make sure you're not left behind.

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