1. Be cautious with hot tips
Investment websites, industry experts, TV shows, colleagues and even family members may all tout the latest tip
for the next big thing. Don’t succumb to FOMO and jump into an investment without understanding how it works or the risks. Do your own research and take the time you need to determine whether the investment is worth it or not and fits with your financial goals.
2. Create a financial plan and stick to it
Think about the short-and long-term
financial goals you want to achieve, your time horizon
and your tolerance for risk. Create a financial plan
that will help you achieve those goals, and then follow it. Read more about What your financial plan should cover.
3. Overcome your behavioral biases
Whether we’re aware of it or not, there are behavioral biases that can influence our reaction to FOMO. Here are two of the most common ones:
Confirmation bias – We have a tendency to look for information that supports our beliefs and affirms that our point of view is correct. Read more about confirmation bias.
Solution: Seek out information that contradicts what you think about a particular investment.
Overconfidence – Research shows that many people are overconfident in their own investing abilities. We may recognize that, on average, most people can’t “beat the market” by trading frequently. But somehow, we feel that we’re the exception. Read more about overconfidence.
Solution: Give yourself a reality check. Even professional investment advisers may struggle to achieve better-than-market returns.
4. Take a long-term view
For most investors, investing to achieve goals is a long-term pursuit. Wealth builds gradually over time, rarely overnight. Resist the temptation to panic at bad news or chase after the latest craze. Focus patiently on achieving your plan and avoid making decisions out of fear of missing out.
What is the biggest mistake you have made in your investing and how can we learn from it?
Don't waste your investing mistake, even if it will upset you. We all learn from our mistakes. But it's wise to learn from others' mistakes.
PS - it hurts to remember, but it'd be worse to forget.
Comments
May I add learning from own mistake usually painful hence you will remember unlike learning from others you may forget 😁
Tios are always hot, hot to handle.
Good read.