FOMO (Fear of Missing Out) is a No-No

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“One thing my pop always told me is you never count another man’s money. It’s what you’ve got and how you take care of it.” – Stephen Curry, NBA MVP

Does this sound familiar?  Friends chat about the local happenings at a coffee shop, until someone blurts out, “I got a 30% return on my retirement account last year.”  Huh? You thought your 18% return was great as you’re now a little ahead of plan towards retirement. All of a sudden, you’re questioning your investment strategy, your advisor, perhaps the people that run your 401(k), the mutual fund company, what have you.  Your gut’s turning because your friend is getting richer than you.

The dreaded FOMO (Fear of Missing Out) syndrome is settling in.

FOMO reactions can potentially derail one’s investment strategy and financial plan. In order to play catch up, you may ramp up your stock exposure above what’s needed according to your financial plan, engage in day trading, or put a substantial amount of money into obscure, yet sexy sounding investments.  The stuff that can quickly go south on you, resulting in losses and getting off track towards your financial goals.

Here are the top 3 actions steps to help protect you from FOMO:

Know your vision

What do you want out of life?  What does this look like? Is it exploring new places, a new career, or more time with family?  A well thought out vision sets your mind (and wallet) on a proper course. Your vision is as personal as your fingerprints.

Find your true benchmark

Unless your job is a portfolio manager with a bonus tied to beating a market index, your true benchmark is the investment return needed to fulfill your life’s vision.  If it’s more than 7-9% average return a year, we need to talk. I feel with the proper planning and guidance, the capital markets – stocks & bonds – should give you the return you need.

Develop your game plan

A financial goal is a goal that takes money and planning to achieve.  How much does your lifestyle cost? How will that change if you freelance, retire, move, etc.?  How much savings and investments do I need? What is the gap from where I am now to where I want to be?  Is the projected rate of return I need reasonable? Answers to these questions are personal to you. All successful investing is based off a plan.  Investing accidents are caused by market timing and speculative investing.

Your vision is unique.  Your goals are all yours, not your friend’s or your coworker’s.  Success lies in sticking with your financial plan and investment strategy.  Working together, we can just say no to FOMO.