When it comes to investing, it's normal to feel left out when others seem to be making quick money. This is especially true with cryptocurrencies, which can have enormous short-term gains and a certain 'cool factor'. Amos Nadler, a behavioral finance expert, warns that this fear of missing out (FOMO) can lead people to make risky decisions. Cryptocurrencies are different from traditional assets like stocks because their prices are mainly driven by investor speculation, making them highly volatile.
It's important to have a plan when considering cryptocurrency investments. First, be honest with yourself about your feelings. It's okay to be curious or excited, but don't let these feelings cloud your judgment. Next, figure out if you're investing or speculating. Long-term investments require thorough research, while speculating involves taking a risk with the hope of big gains.
If you decide to speculate, be realistic about how much you're willing to risk. Don't put all your savings into a single, risky investment. Instead, set aside a small portion of your wealth for speculative investments. This way, you can enjoy potential gains without putting your entire financial well-being at risk.
