Don’t let fear of missing out control your investment decisions

The term “FOMO” is defined as “a state of mental or emotional strain caused by the fear of missing out.” It’s also a form of social anxiety — a compulsive concern that one might miss an opportunity or satisfying event, often aroused by posts seen on social media websites.

Although it is natural for people to experience FOMO, such anxiety can lead us to make bad decisions.

Judgment should not be clouded by the desire to fit in or fear of being left out of the fun. This is especially true when it comes to our hard-earned money. Just because your friends and neighbors are investing in a certain stock or asset class doesn’t mean it’s an appropriate investment for you.

Oftentimes, if something seems too good to be true, it probably is.

That’s why it’s important to slow down, research that investment opportunity everyone’s talking about and consider its long-term impact on your financial well-being and goals.

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Those who are new to investing and/or have suddenly come into significant wealth can be especially vulnerable to letting FOMO overtake them when they hear about hot investment tips or opportunities.

How would they know better? Like any other skill, investing takes time to master. Therefore, most investors could benefit from experts who they trust to develop and implement an appropriate investment strategy that reflects their goals and values.

Guiding investor clients through periods of stock market volatility has illustrated how “successful” investing is determined by the amount of time spent in the market — not timing the market.

As the saying goes, “don’t put all your eggs in one basket.” A savvy investor will take a gradual, broad-based approach. To that point, it’s not smart to invest your entire stimulus check or year-end bonus in a single company you’ve read is going to be the next big thing.

Of course, you could buy some shares of that company if you can afford to lose every penny, but we recommend starting simple and obtaining broad-based market exposure through, for example, passive, index-tracking exchange-traded funds, so you can learn how the market works.

After you’ve felt the highs from your potential investment returns and lows from losing money, you might be prepared to take on more targeted or complex investments.

To help pacify any FOMO tendencies, you might consider engaging with a trusted financial advisor who can work with you to develop a financial plan that prioritizes your goals and values. To that end, an effective plan will set up guardrails to make sure you stay on the appropriate path for maintaining your financial well-being and independence.

If a particular investment or other potential decision does not fit the parameters of your financial plan, you will find…