Fighting the FOMO Factor

FOMO. Otherwise known as the “fear of missing out”, plays prominently in the investing world.

Real estate investing is boring. You buy a great property, in a great location, which brings in great tenants, and that brings great long-term profits. Yeah, yeah. I’ve heard that before Dominguez! But what is new and exciting. Where is the next big thing? Over the past couple of years, two new categories made it to the headlines almost daily.

• First up is Bitcoin and other cryptocurrencies.
• The second is marijuana stocks.

In both instances, you couldn’t get through the evening news, go to the gym, or even get your hair cut without hearing about people investing in these things. When a 65-year-old grandmother tells me that she’s bought a bitcoin or someone is refinancing their home so they can load up on marijuana stocks, I know it is time to run from that “investment”. Everyone is looking to get rich quickly. Without putting in the efforts, people want to walk into a fortune. That is why lottery tickets are so popular. I listen to the great investors of our time. It is tempting to “put it all on black” and bet on the next big thing, but more often than not, investments like that fluctuate violently. Unless you get damn lucky, odds are that any gains you made will be wiped out in a vicious correction – plus some. Maybe even, plus a lot.

…my real estate holds its value…

I may never see the 100% gains seen is some random investment, but my real estate holds its value, generates me cash flow, pays down its own debt and steadily builds me wealth. Remember that GTA area properties have seen 6%+ gains since the turn of the century. With proper leveraging, you can expect to see 30%+ annually. That means in 3 years, your equity will have doubled. Even if the gains slow down and values double in 5 or even 8 years, you are building sustained equity that is far less likely to be affected by market conditions. The next time you are tempted to “go big” on Bitcoin, Bre-X, marijuana stocks, tech startups, or whatever pyramid scheme comes out in the future, try to take a deep breath and relax. Let others have their short-term gains. We stay away from the FOMO mentality and will win out in the long run.