Shifting from FOMO to JOMO

Today I wanted to talk about something I've been noticing lately with some of our clients.

It's called FOMO or Fear of Missing Out.

Perhaps you felt it before when the market or particular types of investments rallied and you felt like you were not there to benefit from it.

But the FOMO idea applies to other situations too.

Your brother finally got his big equity payout because his employer got bought.

Someone at the water cooler just went all in on crypto and is convincing you it was the right move.

Or, someone else at the water cooler just liquidated their portfolio and went all in on CDs and is convincing you it was the right move.

All of these experiences are stirring something up in you.

You are feeling uneasy and worried that you're missing out on the benefits of whatever it is someone else is doing.

You felt confident in one moment, but after you find out what someone else is doing, you feel afraid.

"Am I doing the right thing? Should I be doing what they're doing?"

Let me be clear. This fear is completely normal and very common.

Having fear isn't really an issue, but letting that fear rule your decisions can completely derail an otherwise solid financial plan.

Chasing the returns

In my professional experience, probably the most obvious form of FOMO comes in the form of return chasing.

In short, return chasing is putting your money in an investment because you think it's going to make you rich quickly.

But return chasing often ignores the risk component of these decisions.

As the saying goes, "there is no free lunch."

Anything that sounds too good to be true probably is.

I was just speaking with one of my clients who is in his late 50s about this very subject. We will call him Jared for this newsletter.

Jared has been diligently contributing to his retirement accounts for the last several years and accumulated significant funds with good returns.

But his friend loaded up his portfolio with hot tech stocks and apparently experienced returns that were double Jared's.

When we met and Jared brought up his concerns, I could sense that he wasn't fully comfortable with his friend's "strategy" but something in him wanted to make sure that he was not missing out.

This is a classic example of FOMO and certainly worth a conversation.

In Jared's case, we reviewed his plan, goals and most importantly his risk tolerance.

It became clear that staying the course was the best option and it was really FOMO that was temporarily driving Jared's thinking.

The other side of the coin…

It's worth mentioning that FOMO doesn't just affect people's perception of higher risk investments.

It can also have an impact on you if you are seeking security.

Fear of entering the market at the "wrong" time keeps so many people on the sidelines.

I've seen people sit in cash for years waiting for the right moment to invest.

That wait often costs them more than any market downturn would have.

Real reason FOMO happens

I want to propose another way of looking at the struggle of FOMO.

The way I see it, when we fear missing out on something, we're believing that we don't have "enough."

I don't have enough money, so I need to keep working.

My current investing plan isn't getting me rich fast enough, so I need to take a bigger risk.

Some people continue to pursue certain career goals even when they know it no longer makes them happy.

They are just fearful of missing out if they stop.

So, how do we get out of this scarcity mindset?

Shift to joyful decisions

The opposite of scarcity is abundance.

And what do we do when we have abundance? We say "No thank you" to the things that don't fit or matter anymore.

There is actually a name for this. It’s called JOMO or the Joy of Missing Out.

If your plan needs an annual return of 6% to be successful, do you really need to chase higher returns when it's simply not necessary?

When you feel the pressure of FOMO, ask yourself:

"What do I already have?"

"What is going right?"

"Where do I feel joy, peace and gratitude?"

From a practical perspective, use your financial plan as your decision filter.

Someone at work wants you to invest in a new stock promising 10x your investment?

After checking your plan, you realize you are already on track to retire without taking on more risk.

Thinking about hiding your money under your mattress?

After checking your plan, you remember you already have many years of expenses in your bond allocation. And that your mattress earns -3% when accounting for inflation.

Talk about risky!

What does this mean for you?

This newsletter turned out to be longer than originally anticipated. So I will wrap it up quickly.

All jokes aside, please understand when enough is enough.

And when this happens, you can joyfully miss out on the things that simply don't matter for you and your plans.

And remember: you are enough.