How to Overcome FOMO on Investments

Welcome confidante community to another live session hosted by Jackie Porter, and her co-pilot, Jin. The topic of discussion is “Overcoming FOMO on Investments.” Remember, these interactive sessions are designed to make financial conversations accessible and enjoyable while imparting valuable lessons to our community. They both shared their wealth of knowledge and experiences, providing a holistic understanding of FOMO and its impact on investment decisions.

Understanding FOMO: The Fear of Missing Out

Jackie and Jin began by defining FOMO as the fear of missing out on a seemingly lucrative investment opportunity. They explained how FOMO can be triggered by social influence, making investors feel compelled to jump onto a bandwagon without fully understanding the risks involved. Drawing from their extensive experience, the speakers shared anecdotes of clients who succumbed to FOMO-driven investments and the challenges they faced as a result.

Real-Life Examples: Navigating Bubbles

To underscore the importance of FOMO awareness, Jin presented real-life examples of investment bubbles. They discussed the tech industry boom in 2022, where investors witnessed rapid growth in technology stocks, only to face significant losses when the bubble eventually burst. Similarly, they delved into the historical “Tulip Mania” of the 1600s, highlighting how irrational exuberance led to an inflated tulip market, ultimately resulting in a disastrous crash. These are real life examples of the cycles of bubbles.

The Role of Education and Analysis

To overcome FOMO, Jackie stressed the significance of education and analysis. They encouraged investors to gain a thorough understanding of their investments, assess their risk tolerance, and align their choices with their long-term financial goals. Remember, you can seek professional advice which can be instrumental in making well-informed decisions and avoiding impulsive choices based on external tips and market trends. Reach out to our team at jody.euloth@askjackie.ca to get advice on overcoming FOMO on investments.

Diversification and Sustainable Wealth

Jackie and Jin emphasized diversification as a key strategy to combat FOMO. They emphasized the importance of maintaining a diversified portfolio that balances risk and reward, tailored to each individual’s financial circumstances and objectives. The duo elaborated on the concept of “sustainable wealth,” where the primary focus is on generating consistent, long-term returns rather than chasing short-term gains in the market.

Learning from Past Mistakes

During the session, Jackie highlighted the cyclical nature of markets by exploring past investment bubbles. They discussed the dot-com bubble of the late 1990s, where euphoria surrounding technology stocks led to an eventual crash. Similarly, they revisited the real estate market crash of 2008, underscoring the importance of understanding market cycles and being prepared for potential downturns. A typical market cycle at the beginning of a bubble tends to resemble the euphoria someone may feel when they gamble, excitement- followed by fear around losing money on bet they made- and then disappointment or depression from getting caught up in the moment after going way above their comfort zone, in terms of how much they invested. When making an investment, ask yourself, why are you making the investment in the first place? Is it based on rational or irrational expectations of future returns? Remember the first rule of investing is to check your emotions at the door.

Empowering Investors to Make Informed Choices

We encourage you to develop a well-defined investment philosophy that aligns with your financial objectives and risk tolerance. By staying educated, diversified, and focused on long-term goals, investors can confidently navigate the market and resist the lure of FOMO-driven decisions. We hope we have left you with a deeper understanding of FOMO and the tools necessary to overcome it, setting you on the path to achieving sustainable wealth and financial success. Do you need investment advice and planning? Reach out to our team at jody.euloth@askjackie.ca to start discussing you financial future