If you want to be the CEO of investing world.
Make sure that you don’t let FOMO (Fear Of Missing Out) get under your skin
Why?
- You will invest in an asset class that is already at super-rich valuations
- Small disappointment will lead to huge correction in the asset class
- If your speed is slow, you will be worst hit — last to exit will lose the most
For example, Bitcoin has been bussin recently.
Bitcoin prices are up 42% in 2024, so far.
But does this mean, Bitcoin prices will keep rising and returns will keep growing? May or may not.
Lot of people bought bitcoin in FOMO in late 2021 as its prices were up 800% in previous 3 years.
But this FOMO cost them too dearly, as Bitcoin prices fell by as much 71% in next 1 year.
So, what should you do?
Well, if you want to be the main character in investing.
ABSOLUTELY, AVOID FOMO.
ASSET ALLOCATE: Invest across asset classes.
If you can’t invest in many, at least invest in equity and debt.
Equity gives growth to your investments and debt gives stability.
ALSO READ: How Mutual Fund SIPs Are Ultimate Tool For Chill Investing
How to get equity:debt in one place?
Mutual funds offer a balanced advantage fund.
What it does – It dynamically invests across equity and debt – depending on market conditions.
Equity prices rise a lot: the fund will sell equities and buy debt for stability
Equity prices fall a lot: the fund sells debt and buys more of equities.
Thus, balanced advantage fund Protects your from FOMO.
It goes against human instinct of chasing trending asset classes, hence against FOMO.
