Don't Allow FOMO to Drive Your IRA Investment Strategy
By J.P. Dahdah, Founder & CEO of Vantage
FOMO, the fear of missing out, is a common emotion that many of us have experienced at various points in our lives. It could be a gathering that we couldn't attend, a coveted concert ticket that we missed out on, or a much-awaited event in which we didn't participate. The impact of FOMO can be significant, affecting not just our mood and self-esteem, but our approach towards financial planning and investments. As Money is Personal™, emotional thinking often dictates the choices of novice investors, leading to potentially harmful financial decisions.
FOMO often creeps into our finances when we hear about other people's successful investments. It could be a friend boasting about their latest profitable deal, a co-worker luxuriating in the benefits of a third investment property, or a news article about a company's incredible growth and its shareholders' substantial returns. These situations can evoke feelings of jealousy and insecurity about our own financial decisions and goals.
How can we then prevent FOMO from adversely affecting our approach towards investments? Here are five effective strategies to help you cope with investment FOMO and safeguard your mental and emotional well-being.
Acknowledge That You May Not Be Missing Out. To combat FOMO, employ psychological distancing - a method that aims to create a mental barrier between you and the financial temptation at hand. Instead of getting caught up in another's financial victory, reassure yourself of the soundness of your own investment decisions.
Recognize If You're Triggering Your Own FOMO. Try the alter ego approach. Step into the shoes of an experienced investor you admire, and ask, “What would they do in this situation?” Emulate your investment idols' strengths and strategies.
Accept That You Can't Do Everything. Be kind to yourself. Understand that no one has infallible foresight and unlimited resources to take part in every successful venture. Reflect on your past victories and how you weathered previous financial storms.
Question If Your FOMO Stems from Deeper Issues. If your FOMO is unearthing general discontentment and insecurities, it's time to dig deeper. Identify the root cause and strategize on how to address it.
Envision Your Future Self. Picture your future self and align your actions with your long-term goals. Consult your future self for advice and heed it!
Tackling investment FOMO might seem like a daunting task, but these practical tips will help you remain level-headed and focused. Remember, the goal is to feel secure and confident the next time you encounter a 'missed' investment opportunity.