7 Ways FOMO Can Wreck Your Investments (And How to Make It Work for You Instead)
Have you ever heard about jumping into an investment because everyone was talking about it, but weren't sure if you should? That worried feeling that you might be missing out is called FOMO – the Fear Of Missing Out – and it's one of the biggest challenges for people thinking about investing for the first time.
What Exactly Is Investment FOMO?
FOMO happens when we see others seemingly getting rich from investments and worry we're being left behind. It's that nagging feeling that "everyone else is making money except me!" This powerful emotion can drive even sensible people to rush into investing without proper preparation, or worse - avoid investing altogether because it seems too complicated or scary.
The 7 Ways FOMO Can Destroy Your Investment Success
1. It Makes You Buy at the Worst Possible Time
When an investment is all over social media and the news, it's often already reached its peak price. FOMO drives people to buy at these high points, just before the inevitable drop. Remember GameStop? Bitcoin in 2017? By the time everyone's talking about it, smart investors are often already selling.
2. It Overwhelms Your Logical Thinking
FOMO triggers the emotional parts of your brain, making it nearly impossible to think clearly:
You stop researching properly
You ignore warning signs
You convince yourself "this time is different"
You rush decisions that should take days or weeks
3. It Destroys Your Carefully Made Plans
Most successful investing comes from having a consistent plan and sticking to it. FOMO is the plan-destroyer:
You abandon your strategy to chase hot trends
You invest money that was meant for other purposes
You take on much more risk than you're comfortable with
Your organised approach gets replaced by chaotic decisions
4. It Makes You Put Too Many Eggs in One Basket
Proper investing means spreading your money across different types of investments. FOMO makes you do the opposite:
You might put too much money into a single "hot" investment
Your portfolio becomes dangerously unbalanced
Your financial security depends on one investment performing well
5. It Creates a Dangerous "Buy High, Sell Low" Pattern
FOMO doesn't just affect buying decisions. When prices start dropping, it transforms into fear of losing everything:
You buy when everyone is excited and prices are high
Then when prices drop, panic sets in
You sell at a loss because everyone else seems to be selling
This "buy high, sell low" pattern is exactly the opposite of successful investing!
6. It Shortens Your Time Horizon
Good investing takes time – often years or decades. FOMO makes you expect overnight results:
You become impatient with steady, reliable investments
You switch strategies too frequently
You miss out on the real power of compound interest over time
You treat investing like gambling, expecting quick wins
7. It Leads to Investment Regret and Stress
The FOMO cycle doesn't just hurt your wallet – it affects your mental wellbeing:
You blame yourself for missing opportunities
You feel constantly stressed about making the "right" moves
You compare your results to others' (often exaggerated) success stories
Your relationship with money becomes unhealthy and anxiety-filled
Making FOMO Work FOR You: The Surprising Flip Side
Believe it or not, with the right approach, you can actually harness FOMO to improve your investment journey:
1. Use It as Your Starting Signal
Let FOMO be the motivation you need to begin learning about investing
Use that initial energy to set up your first investment account
Channel the "I don't want to miss out" feeling into "I don't want to miss years of compound growth"
2. Transform FOMO into Learning Motivation
When you feel the FOMO itch about a new investment trend, make a rule: learn before leaping
Research the fundamentals – what is this investment really worth?
Understand the risks as thoroughly as the potential rewards
This curiosity builds valuable knowledge for all future investments
3. Create a "FOMO-Proof" Investment System
Set up regular, automatic investments that happen regardless of market news
Allocate a small portion of your portfolio (5-10%) for "trend" investments if you must
Having this system means you'll never completely miss out, but also won't risk everything
4. Use FOMO as a Warning Signal
Smart investors have learned to see widespread FOMO as a potential danger sign:
When taxi drivers and hairdressers are giving investment tips, be cautious
When friends with no investment experience are suddenly experts, that's a red flag
When everyone says "you can't lose," that's exactly when you probably will
Your FOMO-Beating Action Plan
Build your emotional strength
Practice recognising when decisions are driven by fear rather than facts
Remember that investing is about your personal goals, not keeping up with others
Create a proper investment plan
Set up regular, automatic investments to remove the pressure of timing
This helps you invest consistently regardless of market hype
Learn the investing basics
Understand concepts like risk/return and diversification
Get comfortable with the idea that investing takes time to work
Think long-term
Focus on your personal financial goals, not beating your mates
Remember that compound growth over many years beats trying to time the market
Remember – successful investing isn't about getting rich quick or following the crowd. It's about building wealth steadily over time to achieve your financial goals.
By understanding how FOMO affects your decisions, you can protect yourself from its worst effects and even use that energy to build a stronger financial future.
Looking for guidance on starting your investment journey? At Invest Catapult, we're helping beginner investors decode the world of finance without the stress and confusion. Our approach starts with understanding your relationship with money before jumping into investments.
#fomo #investing #risk #strategy #planning #trend #stress #financialgoals #emotions