Retail Investors and the Fear of Missing Out (FOMO)

In the past few years, Indian financial markets have seen a notable increase in retail investor involvement, especially among millennials and Gen Z. This change has brought about a heightened impact of digital media, resulting in a behavioural trend identified as the Fear of Missing Out (FOMO). FOMO denotes the stress that investors feel when they see others gaining substantial profits, leading to hasty investment choices fueled by emotion instead of careful analysis. This review article investigates the psychological foundations of FOMO from the perspective of behavioural finance and analyzes its effect on retail investment trends in India. It examines actual cases like the IPO surge, cryptocurrency excitement, and the impact of social media sites and financial influencers. The piece also explores the outcomes of decisions driven by FOMO, such as heightened risk exposure, inadequate diversification, and a focus on the short term. Ultimately, it underscores the significance of financial literacy, consistent investing, and regulatory measures to encourage rational actions among retail investors. The results highlight the necessity for greater awareness and behavioral education to assist investors in making informed and sustainable financial choices.