Being at the investment industry may give you experience, but there is always that fear inside each of us. Fear can have a considerable effect on how you make decisions related to your finances. Whether you want to invest in real estate, buy stocks form a company, or try trading cryptocurrency, fear can influence your ability to make decisions.
Though this can prevent you from pursuing what you want, a certain degree of fear can keep you focused and make you more alert. This means that fear is not necessarily a bad thing. Fear can be divided into two types, namely F.O.N.G.O and F.O.M.O. Even though these forms of fear can have an impact on your finances, it is possible to use them to your advantage.
The fear of missing out (F.O.M.O)
During investing, you may panic every time you think that you may miss out on a great opportunity. The thought of other people grabbing the opportunity before you do can cause panic. Since the market keeps on changing, investors are on always alert since they don’t want to be left behind. Though this fear heightens your senses, acting on your motion can prevent you from making the right decision.
Risk is part of investing, and it is through taking risks that investors gain rewards. You should, however, try to evaluate your risk tolerance and determine how much risk you are comfortable with. Know what you can afford to lose from the investment and avoid going beyond your limits.
As you invest, you need to come up with a budget to avoid making losses. A budget should guide you in making the right investment decisions. You should also develop a clear investment strategy and set goals. Know if you are investing for short term or long term purposes. This fear makes you follow others blindly while making decisions based on emotional impulses. Instead of taking such actions, you should come up with a plan and make informed decisions based on your investment goals.
The fear of not getting out (F.O.N.G.O)
Do you fear getting trapped in a particular financial situation during investing? Changes in the market can cause this form of fear. Many investors panic from the thought of losing. Though this form of fear can spread fast, you should not let it affect you. Keep on reminding yourself of your goals in investing and try to assess the situation at hand using logic and not on emotions.
Instead of making hasty decisions during market cycles, try to focus on your long term plans. Since market cycles can last for a few hours, days, or even months, try not to make decisions without looking at the bigger picture. Acknowledge your fear as you review your strategy to ensure that you are still on the right track.
You can also reduce your risks of making losses by diversifying your portfolio. Spreading the risks can guarantee the safety of some of your funds and help you make more confident decisions without letting fear cloud your judgment.