Weekend Reading: FOMO Edition

Millennials are experiencing FOMO – or the fear of missing out – a social angst driven phenomenon that appears when something exciting or interesting may be currently happening elsewhere. FOMO, a close relative of YOLO, is fuelled by social media and the desire to stay constantly connected with what others are doing.

When it comes to housing – especially in hot real estate markets like Toronto and Vancouver – FOMO is pushing young Canadians into risky financial situations. In some cases, housing prices are rising faster than first-time buyers can save up for a downpayment. Millennials see their friends and relatives, many of whom got into the housing market years earlier, making a killing on their investment, and understandably want a piece of the action.

That’s one reason why this blogger decided not to wait until she saved up a 20% downpayment to buy her first home in Halifax. In her case it’s a well thought out decision, given that she has a clearly defined savings goal, has already been saving for a year, and has a reasonable budget of $300,000. But it’s clear, as even the author admits, that emotions can often trump math when making a big decision like buying a home.

Meanwhile, this smart Millennial has a different fear of missing out and it has fuelled an ambitious goal of saving 50% of her income:

“Sure, you can be afraid that you’ll miss out on going to that third musical festival this year, or that all of your friends have been to Thailand and you haven’t, but here’s what’s even scarier to me.

 

Not taking advantage of the only time I’ll ever have the power of 35 to 40 years of compound interest on my side.”

This Week’s recap:

On Monday I compared Facebook to Kijiji in this secondhand economy smackdown.

On Wednesday Marie delved into financial planning for couples: planning your new financial life together.

And on Friday we opened up the Boomer & Echo mailbag and answered questions about renovating your home for resale.

Weekend Reading:

As I mentioned above, emotions often guide our buying choices. That’s why I’m so fascinated with behavioural psychology and the biases that we display when making decisions. Here’s a chart outlining 20 cognitive biases that screw up our decisions.

Blogger Krystal Yee muses about the crazy Vancouver real estate market after observing a nearby home selling for $1.4M. Yee rents and concedes that she’ll never buy a home in Vancouver.

Dan Wesley explains with first-hand experience why condos aren’t a good investment.

Notorious real estate bear Garth Turner reveals a rare human moment when he describes his experience buying a rundown commercial building and restoring it into a three-bedroom apartment atop a hipster cafe.

As FinTech helps reshape the financial services industry, here’s a sneak peek at what’s next for personal financial services.

A paper released by the School of Public Policy at the University of Calgary argues that proposed changes to financial advisor compensation could lead to an “advice gap” where advisors are forced to leave the industry, leaving smaller investors without access to financial advice.

Rob Carrick disagrees, saying the idea that investors will be adviser-less if fee reforms are made is wrong.

“Mutual fund sellers are no thin blue line protecting us from a retirement crisis.”

Meanwhile, Canadian investment firms have close to $1-billion dollars in outstanding regulatory fines.

How does time and rate of return matter to an investor? Preet Banerjee explains in this video:

Michael James describes a financial product that he’d like to see created that addresses longevity risk while still being exposed to the stock market.

Being out of the market for the past 7-10 years has been far more damaging that any difference in mutual fund fees. Here’s where even mediocre funds beat brilliance.

Carl Richards says the solution to maintaining a budget is awareness.

Here are five things every soon-to-be parent needs to know about parental leave.

Move over RRSP, TFSA: Here are 7 strategies for maximizing investment returns you might not know about.

Your interactions on Facebook are creating a great place for companies to advertise. Here’s how you’re making Facebook a money machine.

According to American research into senior housing, assisted living is now topping $5,000 a month in some places.

Adam Mayers on avoiding the pain in managing health-care costs in retirement.

Air Canada says parents must pay to guarantee 2-year-old can sit with them on flight.

You can now use Aeroplan miles to pay for taxes, fees, and surcharges on your flight rewards. But beware: you’re getting about 33% less value for your miles than when you redeem for airfare alone.

Big Cajun Man Alan Whitton wonders how self-driving cars will change other aspects of our lives, such as the need for car insurance.

An argument that Harvard University should be spending much, much more of its endowment money.

Finally, an interesting read on the unmasking of the men behind Zero Hedge, Wall Street’s renegade blog.

Have a great weekend, everyone!