By J.P. Dahdah, Founder & CEO of Vantage
FOMO, the fear of missing out
All of us can relate to the feelings created by it. We can experience it any time we get an invite to a party, vacation, or special event.
For some reason, we cannot be present for all the fun we believe others will have without us. Studies show that FOMO leads to extreme dissatisfaction and has a detrimental effect on our physical and mental health. People can experience mood swings, loneliness, feelings of inferiority, reduced self-esteem, and increased levels of negativity, even depression.
Due to the impact of FOMO, it’s easy to understand how it can influence our investment moves.
Money is Personal™.
Therefore, emotions can play a pivotal role in how inexperienced investors make decisions, leading to detrimental financial mistakes.
Recent statistics shared by TrustPulse illustrate how prevalent FOMO truly is. 60% of people make purchases because of FOMO, mostly within 24 hours. 56% of people who experience FOMO are ages 18-30. Additionally, 7 out of 10 millennials experience FOMO. Okay, so we know FOMO is real and particularly dangerous concerning our money matters. Historically, more attention has been on the fear of losing money with our investment selections.
Investment FOMO preys on the fear of missing out on a big financial gain.
So how does FOMO begin to creep into our financial lives?
A friend brags about the money they’re making in their investment and subtly shames you for not being in the deal.
You read an article about a company with explosive growth. The shareholders are receiving triple-digit returns, but you don’t own any.
Your neighbor shares that she is actively trying to “buy low” given the decreasing prices in the volatile stock market.
Your co-worker is overjoyed because they recently purchased their third rental property in an emerging neighborhood. They are receiving an above market-rental rate, yet, you don’t own any investment properties.
As we find ourselves in these situations, we begin to perceive that others are winning at the financial game. They are having more fun and living better lives. These feelings can begin to create a deep sense of envy and harmfully impact our self-esteem. We begin to doubt our investment decisions which can increase our anxiety surrounding our ability to achieve our financial goals.
Naturally, this leads us to ask what steps to avoid FOMO in our investment behavior.
Here are 5 strategies to mitigate investment FOMO from damaging your mental and emotional wellbeing.
The following steps begin with your ability to recognize that you are currently in an emotional state of investment FOMO.
Self-awareness is a critical muscle to build to develop more self-control and investment discipline.
Realize You Might Not Actually Be Missing Out
This is accomplished by creating what is known as psychological distancing, which is the use of language to put mental space between you and whatever reactionary monetary temptation you are struggling with. Talk to yourself in the third person as another person would: “J.P., you’ve made smart investment decisions that are appropriate to your goals, and their investment victory isn’t connected to your situation.“.
Consider If You’re the Cause of Your Own FOMO
Create an alter ego. Imagine you are a different person, a more capable and experienced investor (i.e., Warren Buffett), and ask yourself, “What would Warren do in the same situation?” Pick your investment superhero and model them!
Be Okay with Not Being Able to Do It All
Give yourself some grace and accept the reality that you don’t have a crystal ball or the time and resources to be in every winning strategy. Take a walk down memory lane and recall a time in your past when you successfully kept your resolve and overcame previous financial challenges.
Ask Yourself If Your FOMO Is About Something Bigger
Consider whether this FOMO dredges up feelings of general unhappiness in your life and insecurities. If so, you may need to take the necessary time to figure out the root cause and evaluate how to change it.
Imagine Your Future Self
Visualize yourself in the future, the way you want to be so you can connect your actions to your future goals. Ask your future self for advice and then take it!
Investment FOMO might seem difficult to fight off, but we can all be better at avoiding it with a little practice.
Using the tips here, you can help yourself feel calm, cool, and collected the next time you feel you are missing out on an investment victory.
Happy investing!
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