What is FOMO in investing? How the fear of missing out can cost you money

Are you feeling FOMO without realizing it?

Have you ever felt uneasy watching other people make money from a stock, ETF, or other asset you did not buy in time? Perhaps you asked yourself:

"What if I don't buy right now?"

Or:

"What if the price keeps rising and I'm still on the sidelines?"

That feeling has a name: FOMO, the fear of missing out. It is one of the most common emotions in financial markets, and it sits behind many rushed investment decisions.

FOMO does more than push you to buy at an unsuitable price. It can also weaken your discipline, pull you away from your financial plan, and make you judge risk less accurately. If you are not yet sure where an emotional reaction ends and an investment plan begins, read Speculation vs. long-term investing first. If you are completely new to investing, it may help to review the basic concepts before reading on.

What is FOMO in investing?

FOMO stands for fear of missing out. In everyday life, it might appear when friends go travelling, attend an event, or own something you do not have.

In investing, FOMO usually appears when you see other people making money from an asset:

• You read news about a stock that has risen sharply.

• Someone on social media shows off a large gain.

• A friend talks about an opportunity that is "too good to miss".

Gradually, an uncomfortable thought takes shape: "What if I don't get in?" That is FOMO.

Why is FOMO so powerful?

FOMO is not purely a financial problem. It is rooted in human psychology. One common explanation is that, for most of human history, being left out of the group was dangerous, so people tend to be highly sensitive to the feeling of falling behind.

In investing, this often looks like:

• Feeling anxious because others are making money and you are not.

• Being afraid of missing a price rise.

• Wanting to act immediately to make the discomfort go away.

• Feeling that you are slower than everyone else.

The problem is that a decision made mainly to relieve an emotion is not based on the asset, its risks, or your plan, so it gives you no good reason to expect a better outcome.

How does FOMO usually show up?

When prices rise sharply

This is the most common situation. A stock rises for several weeks in a row, an ETF reaches a new high, or a sector becomes the hot topic. At first you only watch. Then you become curious. Eventually you feel you must buy before it is too late.

When everyone keeps talking about the same opportunity

When many people mention the same asset, it is easy to feel you are missing something. This is especially common in investment chat groups and on social media.

When you see large gains

Someone might post: "I just made 200%." What you usually do not see is:

• How much risk they took.

• What losses they had along the way.

• How many other people tried the same thing and did not succeed.

That missing information makes the opportunity look more attractive than it really is.

Why does social media make FOMO stronger?

Social media tends to surface the most striking stories. You often see big gains, quick success, and decisions that look brilliant. You rarely see mistakes, losses, or the years of waiting that many investments involve.

The result is an incomplete picture of what investing is really like. When you are constantly exposed to success stories, it is easy to feel that everyone is making money except you.

A real example: FOMO during Vietnam's market boom

In 2021, many stocks on Vietnam's market rose sharply over a short period, according to the State Securities Commission of Vietnam (SSC; page in Vietnamese). The number of newly opened securities accounts also climbed steeply, as shown in account statistics from the Vietnam Securities Depository (VSDC). On social media, many people shared their profits, success stories, and fast-rising holdings.

Many newcomers entered the market not because they understood the businesses or had built a long-term plan, but because they felt: "Everyone is making money. I can't stay out." That is FOMO.

When the market corrected in 2022, as described in the Ho Chi Minh City Stock Exchange (HOSE) 2022 annual report (in Vietnamese), many of these investors realized that their original decision had been driven more by emotion than by a clear investment strategy.

How is FOMO different from a real opportunity?

Not every rising asset is a FOMO trap. A good investment opportunity can still be a genuine opportunity. The difference lies in how you make the decision.

With a genuine opportunity, you still have time to:

• Research the asset.

• Assess the risks.

• Check it against your financial goals.

• Decide what share of your portfolio it should take.

• Confirm that it fits your long-term plan.

FOMO, by contrast, creates a feeling of "I have to act now." If you feel pressured to decide within minutes or hours, that pressure is usually a sign of emotion rather than evidence of a high-quality investment.

A sound opportunity should not require you to abandon your discipline, dip into your emergency fund, or set aside your personal financial plan.

Does FOMO always lead to bad decisions?

No. FOMO is an emotion, and emotions in themselves are not the problem. What matters is how you respond.

One person may notice they are feeling FOMO and still:

• Research the asset carefully.

• Assess the risks.

• Check their financial goals.

• Decide calmly.

Another person may buy immediately just to make the anxiety stop. The two decisions can be very different, even if they involve the same asset.

Signs you may be experiencing FOMO

1. You feel you have to buy right now

If you catch yourself thinking "I need to buy today" or "If I don't buy now, the chance will be gone", pause. An opportunity that only makes sense if you decide within a few hours deserves extra suspicion; a decision you have not had time to check is not yet a plan.

2. You want to buy an asset you do not understand

If you cannot explain how the asset works but still want to own it, FOMO may be shaping your decision.

3. You keep checking the price

Following the market is normal. Checking the price many times a day because you are afraid of missing out can be a sign of FOMO.

4. You feel upset when others make money

One of the strongest signs of FOMO is frustration, regret, or self-blame when you see other people earning gains that you are not.

5. You keep changing your plan

You may be saving, or investing for the long term. Then, after seeing a "hot" opportunity, you want to drop your whole original plan to chase it. That is a warning sign worth noticing.

6. You only look for information that supports buying

When FOMO takes hold, you may want to read only the opinions that support buying. You skip over risk, valuation, costs, taxes, exchange rates, and worse-case scenarios.

7. Staying out feels worse than losing money

If the feeling of being left out bothers you so much that you are ready to buy before you understand what you are buying, FOMO may be driving your decision.

A quick self-check

Before buying an asset that everyone is talking about, ask yourself:

• Do I feel I have to buy right now?

• Would I struggle to explain how this asset works?

• Am I changing my plan only because other people are making money?

• Do I keep checking the price?

• If nobody were talking about this asset on social media, would I lose interest in it?

• Am I unsure what I would do if the price fell 20% or 30%?

• Would this purchase take up too large a share of my total assets?

If you answer "yes" to several of these questions, FOMO may be influencing your decision. The aim is not to stop you from investing. It is to help you tell a well-considered decision apart from an emotional reaction.

Example: FOMO and Nvidia

Imagine you keep seeing headlines like these:

• Nvidia shares are soaring.

• AI is booming.

• Lots of people are making money from Nvidia.

At first you only watch. Then you start thinking, "Maybe I've missed it." As the price keeps rising, that thought becomes, "I have to buy now."

At this point, the urge to buy may come more from emotion than from an assessment of the business. This does not mean Nvidia is a good or a bad investment. What matters is why you want to buy it.

If you understand the business, its risks, and its valuation, and you know why it fits your plan, that is a different decision from buying simply because you are afraid of being left behind.

"But what if it keeps going up?"

This is one of the most common thoughts when FOMO strikes: "If I don't buy now, the price will just keep rising."

Sometimes the price will indeed keep rising after you decide not to buy. That does not make your decision wrong. A good decision is judged by the quality of the process behind it, not only by the short-term result.

If you turn down an investment because you do not understand its risks, or because it does not fit your financial plan, that can still be the right decision. You do not need to take part in every opportunity to build long-term wealth.

What happens when you act on FOMO?

1. You may buy at an unsuitable price

FOMO is often strongest after a price has already risen a lot. That makes it easy for beginners to buy after a period of excitement, when the price may already reflect a lot of optimism.

2. You may take on risk outside your plan

You might invest more than you intended, use money set aside for a short-term goal, or concentrate too much in a single asset.

3. You may panic when the market turns

If your original decision was based on emotion, it is usually harder to stay calm when the price falls. Without a clear plan, emotion tends to replace discipline.

4. You may learn the wrong lesson

If you are lucky and make a quick profit, you may conclude that chasing FOMO is an effective strategy. If you lose money quickly, you may conclude that investing is not for you. Both conclusions can be wrong.

5. You may damage your financial foundation

The biggest risk is usually not missing an opportunity. It is using essential money, borrowed money, your emergency fund, or money for short-term goals to chase an asset that is in the spotlight.

Common FOMO situations for investors in Vietnam

Stocks that everyone is discussing

When a ticker keeps appearing in chat groups or on social media, FOMO tends to intensify. If your reason for buying rests mainly on phrases like "it's about to run", "there's a story behind it", or "everyone is buying", be more cautious.

Property news

Stories about zoning plans, new infrastructure, or neighbourhoods where prices are rising can make an opportunity feel once-in-a-lifetime. But property still carries legal, liquidity, financing-cost, and holding-period risks.

US stocks and AI

Large technology companies attract a lot of attention when they grow quickly. Beginners can end up focusing on recent gains and forget to assess the risks, the USD/VND exchange rate, taxes, fees, how the assets are held in custody, and the trading platform itself.

Crypto assets

Sharp price swings and stories of quick success make FOMO especially frequent. With highly volatile assets, buying just because you are afraid of missing out can expose a beginner to far more risk than they can bear.

How can you reduce the influence of FOMO?

Pause for 24 hours

If you feel a strong urge to buy immediately, give yourself at least a day to think. Many emotional decisions look clearer once the feeling fades.

Write down why you want to buy

Complete this sentence:

"I want to buy this asset because..."

If your answer is mainly that the price is rising or that lots of people are talking about it, be more careful.

Review your overall financial plan

An attractive opportunity is not necessarily right for your goals. Before deciding, check your emergency fund, debts, short-term goals, time horizon, and how much of your portfolio the purchase would take up.

Accept that you will miss some opportunities

This may be the hardest lesson. Nobody can take part in every opportunity, and even experienced investors miss many price rises. That is completely normal.

Cap the size of high-risk decisions

If you still want to take part in a high-risk opportunity, consider limiting its size to an amount you could lose without harming your personal financial foundation. Keep in mind that a smaller position limits the damage but does not make the asset itself less risky. For a beginner, protecting your ability to keep learning matters more than trying to win quickly.

The long view: discipline matters more than FOMO

Investors who do well over time are often not the ones who join every trend. They tend to be the ones who can ignore most of the market noise and stick to their own strategy.

Acting on FOMO can sometimes produce a profit. But discipline is more likely to support consistent results over the long term. You do not need to win every opportunity. Sticking with a reasonable plan over a long enough period gives you a better basis for decisions, although no plan guarantees a gain or protects you from losses.

Before you act: questions to answer first

FOMO is a natural emotion, and you do not need to eliminate it completely. What matters is noticing when emotion starts to drive your decisions. Before buying an asset because you are afraid of missing out, ask yourself:

• Do I understand this asset?

• What would I do if the price fell 30%?

• Am I using money I do not need for other purposes?

• Am I changing my plan only because other people are making money?

• If nobody were talking about this asset on social media, would I still want to buy it?

• Is this decision based on analysis or on emotion?

• Do I understand the fees, taxes, exchange rate, custody arrangements, and platform risks?

• Does the size of this position make sense relative to everything I own?

If you cannot answer these questions yet, taking more time to learn is entirely reasonable.

Next step

FOMO is a natural reaction when an asset rises quickly and everyone is talking about it, but it is not a reason to invest. Before buying, write down what would make you change your mind and how large a loss you could accept. That raises a practical question: what are you actually buying when you buy a share? The next lesson explains what stocks are, so you can judge an asset on its own merits rather than on the crowd's excitement.

Continue the main path: What are stocks?

Back to the core lesson: Speculation vs. long-term investing

This content is for personal finance education only and does not constitute personalized investment advice. Consider your own goals, time horizon, ability to bear losses, and financial circumstances before investing.