FOMO Investing: How Social Media Tricks You into Losing ₹20 Lakh
- Samrat Investments
- Apr 16
- 3 min read
The Fear That Costs You More Than You Realize
Imagine this: You’re scrolling through Twitter (now X) and see a post that screams, "This stock is up 120% in just 3 months! Are you still sleeping on it?"
You check the comments—people are posting their profits, screenshots of their trading accounts, and calling those who missed out "losers."
Your heart starts racing. Have I missed the opportunity of a lifetime?
Before you know it, you're on your trading app, buying shares at their peak. A month later, the stock crashes. You lose money. Again.
Sounds familiar? You’re not alone. This is the psychological trap of FOMO (Fear of Missing Out) investing, amplified by social media. And it’s costing people lakhs, sometimes crores.
The Social Media Illusion: Why It Feels Like Everyone is Getting Rich (Except You)
1. Curated Success Stories: The Highlight Reel Effect
Social media platforms are flooded with posts of successful investments, but rarely do people share their losses. If you see 100 posts about profits and none about losses, your brain assumes everyone is winning. In reality, studies show that more than 90% of retail traders lose money in the long run.
The Trick: You only see the winners because losers don’t post. Social media isn’t reality; it’s a highlight reel.
2. Viral Hype: The "Next Big Thing" Syndrome
Every few months, a new stock, crypto, or asset class is hyped to unrealistic levels. Remember GameStop, Dogecoin, and the crypto boom of 2021? Social media influencers, often with hidden incentives, pump up assets to create a buying frenzy.
The Trick: By the time you hear about it, smart investors have already cashed out, leaving you holding the bag.
3. Echo Chambers: The Algorithmic Trap
Social media algorithms push content that maximizes engagement. If you click on one stock-related post, soon your entire feed is flooded with similar content, making it seem like everyone is talking about it. This reinforces the illusion that you must invest now, or you’ll miss out.
The Trick: Algorithms don’t care about your financial well-being—they only care about keeping you engaged.
The Real Cost: How FOMO Can Drain Your Wealth
Let’s break down how FOMO investing can make you lose ₹20 lakh or more over time.
1. Chasing Highs, Buying Expensive
You buy a stock or crypto at its peak because it’s trending. If it drops by 50%, you now need a 100% gain just to recover. Most people panic and sell at a loss.
Example: You invest ₹5 lakh in a stock that’s up 200% already. It crashes 50%. You panic-sell at ₹2.5 lakh. Loss: ₹2.5 lakh
2. Overtrading & Emotional Decisions
Frequent trading due to FOMO leads to losses, brokerage fees, and short-term capital gains tax.
Example: Over 5 years, if you keep losing ₹2-4 lakh per year due to poor trades, total loss = ₹20 lakh+
3. Missed Compounding
If you had simply invested that money in an index fund or solid long-term stocks, your money could have doubled instead of being lost.
Example: ₹10 lakh in NIFTY 50 growing at 12% annually = ₹20 lakh in 6 years
The Solution: How to Escape the FOMO Trap & Build Wealth
1. Follow a Long-Term Strategy, Not Trends
Stop chasing viral stocks. Instead, follow proven long-term investment strategies like index funds, blue-chip stocks, or diversified portfolios.
Example: Warren Buffett’s buy-and-hold approach has outperformed most traders in the long run.
2. Unfollow "Get Rich Quick" Influencers
If someone claims they made crores overnight, ask: Why are they selling courses instead of just investing?
Follow real investors, not hype creators.
3. Use a FOMO Filter
Before buying anything due to hype, ask yourself:
Would I still invest in this if I hadn't seen it on social media?
Do I understand the business behind this stock?
What is my exit strategy?
4. Set Pre-Defined Investment Rules
Decide in advance how much you’ll invest in high-risk assets (e.g., 5-10% of your portfolio).
Automate investments in long-term assets (SIPs, ETFs) so you aren’t tempted by trends.
5. Take a Social Media Detox When Making Investment Decisions
Don’t check Twitter or Reddit before buying an asset.
Read books, study financial reports, and follow real data instead.
Final Thoughts: Invest Smart, Not Fast
FOMO investing feels exciting in the moment but leads to regret later. If you keep falling for social media hype, you might lose ₹20 lakh over a decade without realizing it. Instead, focus on slow, steady, proven investment strategies.
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