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  • What is FOMO in Investing? – THIS IS WHAT YOU NEED TO KNOW!
  • What is FOMO in Investing? – THIS IS WHAT YOU NEED TO KNOW!

What is FOMO in Investing? – THIS IS WHAT YOU NEED TO KNOW!

What does Fear of Missing Out (FOMO) mean?

The term FOMO stands for Fear Of Missing Out, in Dutch also the feeling or fear of missing out on something. FOMO is a psychological phenomenon that many people suffer from. This fear occurs everywhere, a party you can’t attend, the latest smartphone, but there is also FOMO in investing . We will discuss the latter in this blog, we will explain what FOMO exactly means within the investment world and what the dangers are.

How does FOMO arise in investing?

FOMO is mostly fueled by success stories of other people. In the light of investing, you have probably heard success stories about how others have made good money on the stock market or by buying that one crypto coin. These stories make you afraid of missing out and you are inclined to get in too.

FOMO is mainly fueled by the media. The fear of missing out on something good is very human. People are guided by feelings and emotions. However, when investing it is important to be able to act rationally and not let emotion take over.

Success stories can be a great starting point to start investing in a certain product. First read up on it yourself to see if it is still a good idea to get in and do not invest based on a success story alone. Simply getting in because a financial instrument is rising is not always a good investment, the top may already have passed.

Example of FOMO in the financial markets: Bitcoin

The most famous example of FOMO in investing is cryptocurrency and specifically Bitcoin . You probably know the stories of the crypto millionaires who were created by investing in Bitcoin a few years ago.

People also want to get rich and see the price of Bitcoin rise. You don’t want to miss the boat again and decide to invest in Bitcoin in the hope that you can also achieve a success story on possible further price increases. Investing in this way can involve risks.

Risk investing from FOMO

The risk of FOMO is that you enter based on emotion without doing your own research. You enter because the price is rising and you have the feeling that this price will continue to rise. This can of course go well, but in many cases people lose more often with these types of transactions than they   earn a return .

Preventing the FOMO feeling

Let’s get straight to the point: you can never completely prevent FOMO. It is a natural human feeling and you cannot switch off emotion. However, you can better manage and reduce the feeling. You do this by consciously attaching less value to the success stories of others. Success stories are a good pillar to get interested in a share, but always do proper research before you buy something!

It can also help to make an investment plan when you start investing and to stick to this plan. Furthermore, we give the tip that if you still want to invest out of FOMO, you do this with ‘play money’. Use a small percentage of your portfolio to make riskier investments or to try things out.

Not investing worse than FOMO?

In addition to FOMO when investing, you can also have a fear of starting to invest. Negative experiences can make you afraid to invest. Don’t let yourself be guided purely by emotion and make a rational assessment of whether investing is something for you. Always invest with money that you can afford to lose!

The counterpart: FOBI (Fear Of Being In)

Fear Of Being In is a fear that is also common among investors. It is the fear of losing money by staying in a position for too long. FOBI is however a much less known term than FOMO.

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