It usually starts at a barbecue. Someone’s brother-in-law has doubled his money on a chip maker, a crypto coin or some obscure miner you’d never heard of. By the time the burgers are done you’ve got your trading app open under the table, wondering why you’re still sitting in a boring global fund.
That queasy feeling has a name: fear of missing out. It’s probably cost more British savers more money than any stock market crash, because it turns up when prices are already high and talks you into buying at exactly the wrong moment.
Why does FOMO make you buy at the top?
FOMO isn’t stupidity. It’s a perfectly sensible survival instinct pointed at the wrong target. If everyone in the village was running away from something, our ancestors ran too and asked questions later. Unfortunately, markets punish that kind of herding.
Here’s the problem. By the time a share is all over the news, your WhatsApp groups and the finfluencer videos your son keeps sending you, most of the easy gains have usually gone. The people who bought early are the ones now selling to latecomers. You aren’t getting in on the ground floor. You’re the ground floor.
The Financial Conduct Authority has looked at this. Its research into newer self-directed investors found that many were driven by excitement, social media and the feeling that everyone else was making money, not by any real plan. Several said they’d invested in things they didn’t understand. That isn’t confined to twenty-somethings. Plenty of men in their fifties, with a lump sum and some time on their hands, fall for exactly the same pitch.
The maths of buying high
Losses and gains aren’t symmetrical, and that’s what makes chasing a rally so expensive.
Say you put £10,000 into a red-hot share at its peak and it falls by 50%. You now have £5,000. To get back to £10,000 it doesn’t need to rise 50%. It needs to double. A 100% gain just to break even, and plenty of former market darlings never manage it.
Then there’s the round trip. FOMO’s twin is panic. People who buy on excitement tend to sell on fear, so they lock in the loss and miss any recovery. Buy high, sell low, repeat until poorer.
By the time a share is the talk of the pub, you’re not early. You’re the exit for everyone who was.
How do I stop panic buying shares?
You won’t out-think your instincts in the moment, so don’t try. Put rules in place beforehand, while you’re calm.
Write down what your money is for. Retirement in 12 years? Helping a child with a deposit in five? Money you might need within about five years generally shouldn’t be in shares at all, hot or otherwise. Once each pot has a job, a rumour about the next big thing has a much harder time getting at it.
Automate the boring bit. A fixed monthly amount into a diversified investment takes the decision out of your hands. £500 a month for 10 years is £60,000 before growth, and you never had to decide whether this week was the right time. It also smooths out the price you pay. Put £300 in when units cost £3, £300 when they cost £2 and £300 when they’re back at £3, and you own 350 units for £900. That’s an average cost of about £2.57, below the average price. This is called pound-cost averaging. It won’t always beat investing a lump sum in one go, but it’s much easier to stick with.
Give yourself a play pot. If the itch won’t go away, set a hard limit, perhaps a small percentage of your investments, for punts you’re prepared to lose entirely. When it’s gone, it’s gone. You don’t top it up from your pension.
Introduce a cooling-off period. Before buying anything you saw on social media, wait 72 hours. Write down why you’re buying, what would make you sell, and how much of your total wealth it represents. Most urges don’t survive the weekend.
Is it too late to invest if the market is at a record high?
This is FOMO’s quieter cousin, and it costs just as much. Plenty of cautious savers sit in cash for years, waiting for a crash that would let them buy cheaply. Meanwhile markets hit one record after another.
Record highs are normal in a market that rises over the long run. They happen all the time. Nobody, including the professionals, can reliably call the top. If your timeframe is 10 years or more and your money is spread widely, “when” matters much less than “how long”. If a lump sum makes you nervous, drip-feeding it in over six or 12 months is a reasonable middle ground.
Whatever you choose, don’t confuse doing something with doing something useful. Doing nothing, sensibly diversified, is a strategy. Usually a good one.
Use the tax wrappers before you chase anything
Boring as it sounds, your first decision should be where you hold your investments, not what’s hot. For the 2025/26 tax year you can put up to £20,000 into ISAs. Gains and income inside them are tax-free, and you don’t have to report them to HMRC.
Outside a wrapper, frantic trading gets expensive. The capital gains tax annual exempt amount is just £3,000 a year. Above that, gains on shares have been taxed at 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers since 30 October 2024. Capital gains tax is set UK-wide. Scotland’s different income tax bands don’t change the CGT rates, although your income still decides which rate applies. Dividends outside an ISA or pension are tax-free only up to £500 a year.
A word on crypto, the natural home of FOMO. The FCA warns that if you buy cryptoassets you should be prepared to lose all your money. Losses generally aren’t covered by the Financial Services Compensation Scheme or the Financial Ombudsman Service. And remember that anyone promising guaranteed returns or rushing you to act today is a classic sign of a scam, whatever the platform looks like.
If you’re about to move a large sum, such as a pension lump sum, an inheritance or redundancy money, talk to someone who isn’t trying to sell you anything. MoneyHelper is free and impartial, Pension Wise offers free guidance if you’re 50 or over and have a defined contribution pension, and an FCA-regulated financial adviser can give you personal advice.
In short
FOMO tempts you into buying when prices are highest and selling when they’re lowest, and a 50% fall needs a 100% gain just to get you back to where you started. The fix is to set rules while you’re calm: give each pot of money a job, invest a fixed amount automatically, cap any speculative punts, and use your £20,000 ISA allowance before chasing anything. For big or personal decisions, start with MoneyHelper, Pension Wise or an FCA-regulated adviser.
Sources
Midcent Money
Andrew Ingram writes about money for men 45 and over – the years when retirement starts to feel real and the decisions get bigger. Pensions and retirement planning, investing, savings, mortgages and tax: what changed, what it means for your plans and what's worth doing about it. No hype, nothing to sell, and a clear steer on when it pays to get personal advice.
One of Midcent's writers. Spotted something? Write to andrew@midcent.uk.
