Psychology of investing: What is FOMO and how to deal with it?
FinEdge. “With indices at record highs, investors should avoid any hasty decision driven by FOMO, as such market conditions can tempt investors to take undue risks. It will be prudent for investors to continue with their planned investments through systematic investment plans (SIPs).
Staggered investing helps ride out short-term volatility, if any," says Radhika Gupta is the MD & CEO of Edelweiss Asset Management. For what it’s worth, it’s not just the retail investors but also the HNIs (High Networth Investors who are also susceptible to wrong psychological cues from the bourses. Unfortunately, the other side of the fence or waiting it out, does not offer safe havens either. While retail investors should not jump in due to FOMO, taking a step back and waiting isn’t an ideal solution either because that is just another side of the coin.
“Waiting might not be a good option," says Shaily Gang, Head- Products, Tata Asset Management. “It is not about timing the market, it is about time in the market," Gang continues. Total corpus as a multiple of the capital invested becomes higher as you spend more time in the market on account of compounding. In waiting for market bottom to be formed, the investor would lose out on spending ‘time in the market’.
The investor could lose more by waiting in cash (i.e. keeping the money in hand rather than investing) while all SIP tranches could have earned in a market that turns out to be going upwards. “Today with prudent financial advisors providing guidance to investors, there has been a remarkable change in investor behaviour," says Anil Ghelani, Head-Passive Investment and Products, DSP Mutual Fund. An increasing number of investors are focusing on asset allocation and regular systematic
. Read more on livemint.com
