Do you suffer fear of missing out, or FOMO? Are you preoccupied with the thought that you should have purchased a stock before a massive gain? Stocks like Super Micro Computer and Carvana (both up about 800% in a year) come to mind, along with the Magnificent Seven. (To find these top performers, log into finviz.com -- tinyurl.com/3bbc94e3.)

I've told the story before of talking with a conservative retiree in January of 2000 who wanted to sell the holdings in his balanced portfolio to buy internet stocks, because the returns were high at the time, his friends were making money and he did not want to be "left behind" -- a classic FOMO moment. The internet bubble burst a few months later, as the NASDAQ market reached a peak in March of 2000, then dropped 78% by Oct. 9, 2002.

There is always the next trend, the next hot item that is calling for your money -- whether it be a new vehicle, trendy new fashion or an investment extraordinaire.

Lori Schock, the director of the U.S. Securities and Exchange Commission's Office of Investor Education and Advocacy, addressed FOMO in a 2022 Director's Take article headlined "Say 'No Go to FOMO'" (tinyurl.com/2u7j6e8v).

Her views are relevant in today's market. Schock discussed the surge in online investing, digital assets (including crypto currencies) and meme stocks, along with the accompanying promotions by celebrities, but then she makes the key point that "Not every investment opportunity is right for everyone," even if those around you are hopping on those investments. And of course, "market swings are inevitable."

Some stocks -- perhaps those that trigger FOMO -- may need to be seen differently than others. The seasoned investor will keep emotions out of the picture and either stay away or limit exposure to a small, very small, amount of money. The rationale: There has to be a very good reason to buy a stock after it's made a dramatic move.

A retiree needs to be wary. A young trader needs to have a selling discipline. Everyone in between needs to limit exposure to sums of money that can be sacrificed should the upward trend reverse.

If you consider the bigger question of market swings, it's just better from a portfolio point of view to diversify. As Schock points out, the best way "is to create an investment portfolio that has a mix of assets, such as stocks, bonds and cash." For help in understanding what's involved, the SEC provides educational resources for you at the Investor.gov website (tinyurl.com/2s3a3a6y).

When it comes to volatility, if you are thinking of trying to time the market by getting out before a big decline and getting back in "at the right time," Schock notes that "No Go to FOMO" applies to that as well, adding, "It's time in the market that counts, not timing the market."

The 2024 "Guide to Retirement" (tinyurl.com/457jsd5t) by J.P. Morgan, a financial services company, provides a solid example of that in its "Impact of being out of the market" section. If you stayed in the market the entire time between Jan. 1, 2004, and Dec. 29, 2023, you would see a 9.7% total return on your investment. But, if you missed the 10 best days, your return would be 5.5%. Miss the best 30 days? You are down to 0.7%. As the guide points out, "Seven of the best 10 days occurred within two weeks of the worst 10 days." That's a hard thing to time correctly.

Let's turn FOMO on its head and ask: When can fear of missing out be a blessing? Schock suggests if you don't have a saving and investment plan, you need to create one as soon as possible. Investor.gov has free financial planning tools at tinyurl.com/ytran965. Another: Pay off high-interest debt. And, a favorite of mine: Participate in your company's 401(k) plan, maxing out an employer match (if there is one) and taking advantage of the "power of compounding."

In the end, "stick with your long-term plan and don't make investment decisions based on a fear of missing out." This is Schock's final message. It could not have been stated better.

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How do you pay for everyday purchases?

In today’s world, it’s a rare person who doesn’t have a credit card. Credit card debt has surpassed $1.1 trillion in the latest quarter, according to the Federal Reserve Bank of New York (tinyurl.com/yyyazpkh). Ninety percent of U.S. consumers had at least one credit card listed on their credit report as of January 2021, according to Experian’s “The Ultimate Field Guide to Understanding and Improving Your Credit” (tinyurl.com/yy8wtmy4). Experian is one of three nationwide credit bureaus, along with TransUnion and Equifax.

When you think about it, credit underpins just about every financial decision, from personal habits such as how you pay for purchases (whether by cash, a bank transfer to the seller through a debit card or a virtual payment like Apple Pay) to whether you pay your bills on time or want to borrow. That’s just considering the small, everyday purchases. What about the big-deal transactions, such as buying a house, getting a mortgage, paying for college or, for a select few, buying a private jet or building a personal compound on a remote island in the Pacific?

Credit decisions affect just about everyone. The question is, are we all prepared to handle them?

There is more involved than meets the eye.

For example, a Consumer Financial Protection Bureau report released in February found that large banks are “offering worse credit card terms and interest rates than small banks and credit unions, regardless of credit risk” (tinyurl.com/2h6jupx2). The report went on to note that “the 25 largest credit card issuers charged customers interest rates of 8 to 10 points higher than small- and medium-sized banks and credit unions,” adding that the difference “can translate to $400 to $500 in additional annual interest for the average cardholder.”

Terms are just one aspect of using a credit card. There are many others –- and there are valuable tools to help you become knowledgeable about your choices.

Start with FINRA’s “How Your Credit Score Impacts Your Financial Future” (tinyurl.com/mr3sd56f) and “5 Steps to Take Control of Your Finances” (tinyurl.com/mr2tuj22). FINRA, the Financial Industry Regulatory Authority, oversees the U.S. broker-dealer industry.

These two resources will provide you with a good understanding of how credit can affect your finances in positive and negative ways.

The three credit bureaus also provide resources: “Experian Credit Course: A Complete Guide for Beginners,” at tinyurl.com/3wnmttss; TransUnion’s Credit Advice, at tinyurl.com/4hu9mwbp; and Equifax’s Knowledge Center, at tinyurl.com/4tn7c5w9.

To get an understanding of credit scores, go to Experian’s “Ultimate Field Guide.” Scoring helps lenders assess your “creditworthiness -- in other words, how likely you are to repay a loan. Think of it as an indicator of your financial reputation. The higher your credit score, the lower the predicted likelihood you’ll fail to pay your debts.” Five factors that determine your credit score: payment history, credit utilization, length of credit history, credit mix and recent applications.

The Experian guide also debunks certain myths, including “Carrying credit card balances each month helps improve your credit score.” The truth is that “Paying off your card balances in full as quickly as you can will save you money, and could benefit your credit score.”

If you want to look up your credit report, you can do that for free. The Federal Trade Commission provides details about AnnualCreditReport.com at tinyurl.com/yeyn8jnd.

Could your credit score be better? Help is on the way. The Consumer Financial Protection Bureau sets out important steps to take (tinyurl.com/mptnp3js): First, the obvious: “Pay your loans on time, every time.” And the not-so-obvious: “Experts advise keeping your use of credit at no more than 30% of your total credit limit.”

Credit cards are here to stay for the near future. Consumers can benefit from taking a little time to research and understand how to handle them as payment options continue to evolve.

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What investor doesn't like to test his or her knowledge? Here's a chance to do that with an online test put together by the U.S. Securities and Exchange Commission.

Called the "Investing Quiz," this is a monthly 10-question test found at Investor.gov, a website of the SEC (tinyurl.com/3adaud3f).

Some questions are harder to answer than others, but the best part is that after you take the test (you will see one question at a time until you have answered all 10), you'll receive a score, and -- more important -- all of the answers are explained. Let me offer three examples involving interest from this month's (February's) quiz, which also has questions on diversification and crypto assets:

"Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow? A) More than $102? B) Exactly $102 C) Less than $102"

The answer?

"According to the compound interest calculator on Investor.gov, you will have $110.41 in 5 years if you earn 2% per year. At the end of the first year, you would already have $102. In the following years, both the principal and any accumulated earned interest would continue to grow over time."

Here is another question, which is of added importance given today's economic numbers: "Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account? A) More than today. B) Exactly the same. C) Less than today."

The answer: "If the rate of inflation is higher than [the] interest rate you earn on your money, you won't have the same buying power. That's because inflation makes the cost of goods and services go up over time."

And finally, a question about loans and interest rates: "Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per year compounded annually. If you didn't pay anything off, at this interest rate, how many years would it take for the amount you owe to double? A) Less than 2 years. B) At least 2 years but less than 5 years. C) At least 5 years but less than 10 years. D) At least 10 years."

The answer provides more insight into the power of compound interest: "Compound interest can work for you when you save and invest, but it can also work against you if you have taken out a loan! The Rule of 72 can tell you approximately how long it will take for the principal of a loan to double in value (assuming no payments toward the loan are made). Simply divide the number 72 by the interest rate. The amount you owe on a loan with an interest rate of 20% will double about every 3.6 years (72 divided by 20 equals 3.6)."

Each of the 10 questions is worth one point. You'll see your score and the explanations for the correct answers once you have answered the questions. You'll also have the option to take the quiz again.

At the bottom of the answers, you will find a link to the previous month's quiz. Past monthly topics include bonds, diversification and compound interest (November 2023) and investor resilience, crypto assets and sustainable finance (October 2023).

The quiz is not only good for investors who are testing or refreshing their knowledge, it can also help young adults learn about key investing concepts. And, if they want to further explore the concepts of investing, they can click on the "Introduction to Investing" link on the Investor.gov website (tinyurl.com/3fkbnker).

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