Don’t let FOMO cost you: Expert warns Aussies against borrowing to invest

As the stock market rallies and headlines shout opportunity, leading financial expert Alex Jamieson is urging Australians to pause, reflect and resist the urge to act on FOMO; the fear of missing out.
 

Jamieson, a highly respected financial advisor and founder of AJ Financial Planning, said borrowing to buy shares is a dangerous trap for everyday investors, especially those already under financial pressure.
 

"If you don't have a lot of spare cash, borrowing to invest is a huge red flag," Jamieson said.
 

"It's usually a sign that you haven't built a strong enough financial base. Unfortunately, when things go wrong, as they often can in the market, you're left with debt, stress and no safety net."
 

Borrowing to invest can quickly spiral out of control
 

While the idea of leveraging into a rising market may seem attractive, Jamieson warned it exposes investors to significant risk including the threat of margin calls, where lenders demand additional capital if the value of your investments falls.
 

"If the market turns, you could be forced to sell your shares at a loss just to repay the loan," he said.
 

"You not only lose your investment, but you may owe money you no longer have. It's a high-risk strategy that can destroy wealth instead of creating it."
 

In volatile markets, leveraged investors are also more likely to panic-sell during downturns, locking in losses that long-term investors with no debt could ride out.
 

Focus on your foundation, not speculation
 

Jamieson said the smarter move is to ensure your financial foundation is strong before investing. This starts with preparing a detailed budget, tracking your spending and consistently achieving surplus cash flow. From there, the next priority should be establishing an emergency fund.
 

"Once you're in a stable surplus position and you have your buffer in place, only then should you consider an investment plan," he said.
 

The smart alternative: Start small and DCA in
 

Jamieson recommends Dollar Cost Averaging (DCA) as a more sustainable way to invest. This strategy involves contributing small, consistent amounts into the market over time regardless of market fluctuations.

"DCA reduces the impact of short-term volatility. You're not trying to pick the perfect moment to invest, you're building steadily, without emotion," Jamieson explained.
 

Platforms like Betashares Direct allow individuals to start investing with low entry points, making it easier to begin with minimal risk and no need for loans.
 

"Naturally, if you are looking to grow wealth and understand how best to structure yourself, speaking to a financial advisor is the best course of action," Jamieson added.
 

FOMO is not a financial strategy
 

According to Jamieson, emotional investing is one of the most common ways people lose money.
 

"Just because others are making moves doesn't mean you should," he said.
 

"FOMO is powerful, but if you don't understand the risks or don't have the cash flow to support investment losses, you could do long-term damage to your finances."
 

Start where you are and grow with confidence
 

"If you only have a little, start with a little," Jamieson said.
 

"The key is to be consistent. Over time, disciplined small contributions can grow into something meaningful but you can't shortcut your way to wealth by taking on unnecessary risk. That's not investing, it's gambling."
 

About Alex Jamieson
 
Alex Jamieson is the founder of Melbourne-based advisory firm, AJ Financial Planning. With a firm belief in responsible investing, Alex crafts investment portfolios for clients that not only meet their financial objectives but are also sustainable and match their ethical values.
 
A highly respected financial advisor, Alex is considered one of the country's leading experts on all matters financial planning, investing and retirement.
 
http://www.ajfp.com.au/