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The Richest People Are Not Index Fund Fanatics – Why Are You?

I love index funds and ETFs for their low-cost nature and simplicity of ownership. However, if you want to build generational wealth before traditional retirement age, consider looking beyond just index funds and index ETFs.

Since starting Financial Samurai in 2009, I’ve written extensively about investment strategies, financial independence, and retiring earlier to do what you want.

Based on years of reader surveys and conversations, it’s clear this community is one of the wealthiest on the web. A significant portion of you have already surpassed the $1 million net worth mark, while many more are closing in. In comparison, the median household net worth in America is only about $200,000.

With this in mind, it’s time to acknowledge a simple truth: the richest people in the world don’t rely mainly on index funds and ETFs to build their fortunes. Instead, many use index funds primarily to preserve their wealth, not create it.

Why Index Funds Alone Aren’t Enough

Most of us love index funds for their simplicity, low fees, and historical returns. But if your goal is to achieve financial freedom before the traditional retirement age, or to reach a top 1% net worth, index funds alone probably won’t get you there before age 60.

To get rich sooner, you need either:

A massive amount of income to consistently invest large sums into index funds, or
To take more calculated risks in other asset classes

Simply put, index fund investing is best for capital preservation and slower, steadier growth. A potential 10% annual return is fantastic. But at that rate, your investment only doubles every 7.2 years. Hey, I’ll take it, and so would many of you. However, it’s simply not good enough for the richest people.

Your life is finite. Most of us only start working full time after age 18. Forty years might sound like a long time to build wealth, but trust me—it flies by. I’m 48 now, and I graduated college in 1999 at age 22. The past 26 years have zoomed past.

If I had only invested in index funds, I wouldn’t have been able to leave the workforce for good in 2012 at age 34. Don’t forget, there was a “lost decade” for both the S&P 500 and NASDAQ from 2000 to 2012. Relying solely on index funds would have delayed my financial freedom indefinitely.

Besides getting lucky, the only way to achieve financial freedom sooner than average is to take above-average risks by investing beyond index funds and ETFs.

The Average Rich Versus the Richest Rich

First off, if you’re rich—or think you’re rich—congratulations! You’re ahead of at least 90% of the world, which also means you’ve bought yourself more freedom than most. Although it’s tough, try not to let someone richer than your already-rich self get you down. The key is appreciating what you have.

That said, it’s important to distinguish between two types of rich, because they’re not the same. The personal finance community mostly focuses on the first kind—The Average Rich—partly because it’s easier to explain and attain, and partly because many financial influencers don’t have finance backgrounds.

In fact, the lack of financial depth in the space was one of the main reasons I launched Financial Samurai in 2009. Back then, nearly every blogger emphasized budgeting and saving their way to wealth. That’s solid advice for most people, however, I wanted to go beyond that.

I wanted to escape the finance industry altogether and retire early. That’s when I started writing about FIRE for the modern worker. With the internet making it possible to earn and live in non-traditional ways, I saw an exciting opportunity to pursue a different lifestyle.

Ironically, it was 2009—during the global financial crisis—when the digital nomad trend really took off, as millions found themselves out of traditional jobs and searching for something new.

Now let’s definite the two types of rich people.

1. The Average Rich

This group includes individuals or households with investable assets between $1,000,000 and $5 million. They tend to be highly educated, dual-income professionals who max out their 401(k)s, invest in low-cost index funds, and own their primary residence.

Most of their investments are in public markets and real estate, and they typically feel financially stable but not truly rich. Some would describe this as the mass affluent class. Many started off or are HENRYs (High Earners Not Rich Yet), but then often slow down their pace of wealth accumulation once kids arrive.

You might think of the everyday rich person as someone with grey hair, a portly figure, and retiring around the more traditional age of 60–65. They’ve got a median-priced home and might fly Economy Plus if they are feeling particularly spendy. They aren’t eating at Michelin-star restaurants, except maybe for a rare special occasion, like a 30-year wedding anniversary.

The Average Rich know they’re wealthier than most, yet they still don’t feel rich. Instead, they feel closer to the middle class than to the truly wealthy.

2. The Richest Rich

These are the people with $10 million-plus in investable assets, often owning second and third vacation homes, flying first class, and making seven-figure investments. Their kids mostly go to private grade school, which they can comfortably afford without financial aid.

Instead, their money came from:

They might own index funds, but it wasn’t a driver for them to get rich. Instead, index funds are a place where they park their money, almost like a cash plus, until they find a potentially better opportunity.

20% plus or minus moves in the S&P 500 don’t phase them as the Richest Rich often experience much more volatile swings. In fact, the Richest Rich often have investments go to zero as they continuously fortune hunt for the next multi-bagger investment. So often, index funds and ETFs are a small percentage of their overall net worth (<20%).

The Richest Rich Tend To Be Seen as Eccentric

The Richest Rich are often viewed as eccentric, agitators, or downright weird by the general public. That’s because they tend to reject the status quo and do things their own way. As a result, they attract critics—sometimes lots of them—simply for not following societal norms.

They refuse to spend their entire careers working for someone else to make that person rich or organization rich. Instead, they bet heavily on themselves through entrepreneurship and alternative investments. Index funds and ETFs? Boring. Too slow. These folks would rather build something from scratch or swing for the fences.

Many of the Richest Rich also go all-in on optimizing their bodies and minds. They train hard, eat clean, and track every metric they can—often in the hopes of staying fit enough to extend their grind and lifespan.

To most, they come across as quirky or intense. But from their perspective, it’s the rest of society that’s asleep, trapped in a system they’ve managed to escape.

Level of net worth needed to join the top 0.1% in selected countries (U.S., Monaco, Switzerland, Singapore) and more — Source: https://www.knightfrank.com/research/article/2021-03-01-how-deep-do-your-pockets-need-to-be-to-get-in-you-in-the-top-01-of-the-worlds-wealthiest

Real-World Net Worth Breakdowns

Here are a few anonymized examples of the Richest Rich:

Example 1 – $30 Million Net Worth

30% ownership in business equity they started
30% real estate
20% public equities (65% individual stocks, 35% S&P 500 index funds)
15% venture capital funds
5% muni, Treasury bonds, cash

Example 2 – $300 Million Net Worth

40% ownership in business equity they started
20% real estate
20% in other private companies
15% stocks (half in index funds)
5% cash and bonds

The top 1% by wealth in America versus Top 0.01% — Source: https://www.chicagobooth.edu/review/never-mind-1-percent-lets-talk-about-001-percent

Example 3 – $600 Million Net Worth

5% ownership in a massive private money management firm as one of their senior execs
15% real estate
50% in other private companies
10% stocks (half in index funds)
20% cash & bonds (~$180 million at 4% yields a whopping $6.4 million risk-free a year today)

None of them got rich by only investing in index funds. Instead, index funds are simply a low-risk asset class to them where they can park money.

Net Worth Breakdown By Levels Of Wealth

Here’s a good net worth breakdown visualization by net worth levels. The data is from the Federal Reserve Board Of Consumer Finances, which comes out every three years.

Let’s assume the mass affluent represented in the chart below is at the $1 million net worth level. Roughly 25% of the mass affluent’s net worth is in their primary residence, 15% is in retirement accounts, 10% is in real estate investments, and 12% is in business interests.

In comparison, for the Richest Rich ($10M+), at least 30% of their net worth is in business interests. Intuitively, we know that entrepreneurs dominate the wealthiest people in the world. Therefore, if you want to be truly rich, take more entrepreneurial risks and investment risks.

The Richest People Are Not Index Fund Fanatics - Net worth composition by levels of wealth

Time + Greater Risk Than Average = Greater Wealth

Building meaningful wealth often comes down to how much risk you take—and how early you take it. When you’re young, lean into bigger bets. Invest in yourself. Build something. Own something beyond just index funds. If you lose money, you’ve still got time to earn it back—and then some.

If I could rewind the clock, I would’ve taken more calculated risks in my 20s and early 30s. Rather than playing it relatively safe, I would’ve gone bigger on business opportunities and leveraged more into real estate. I also would’ve made larger, concentrated bets on tech giants like Google, Apple, Tesla, and Netflix. The CEO of Netflix, Reed Hastings, spoke at my MBA graduation ceremony in 2006 when the stock was only $10 a share.

In addition, I would have started Financial Samurai in 2006, when I graduated business school and came up with the idea. Instead, I waited three years until a global financial crisis forced me to stop being lazy.

But honestly, I was too chicken poop to invest more than $25,000 in any one name—even when I had the capital to put $100,000 in each before 2012. The scars from the dot-com bust and the global financial crisis made me hesitant, especially after watching so many wealthier colleagues get crushed.

Still, I still ended up saving over 50% of my income for 13 years and investing 90% of the money in risk assets, most of which was not in index funds. I’ve had some spectacular blowups, but I’ve also had some terrific wins that created a step function up in wealth.

Don’t Be Too Easily Satisfied With What You Have

One of the keys to going from rich to really rich is pushing beyond your financial comfort zone—especially while you’re still young enough to bounce back from mistakes.

You’ve got to be a little greedier than the average person, because let’s face it: nobody needs tens or hundreds of millions—let alone billions—to survive or be happy. But if you’re aiming for that next level of wealth, you’re going to have to want it more and take calculated risks others won’t.

I was satisfied with a $3 million net worth back in 2012, so I stopped trying to maximize my investment returns. Big mistake. The economy boomed for the next 10 years, and I missed out on greater upside.

Then in 2025, after another short-term 20% downturn, I shifted my taxable portfolio closer to a 60/40 asset allocation. The temptation of earning 4%+ risk-free passive income was too strong. From a pure returns perspective, that’ll probably turn out to be another mistake long term.

To balance things out, I’ve deployed a dumbbell strategy—anchoring with Treasury bills and bonds on one end, while taking bolder swings in private AI companies on the other. And you know what? It feels great. I get to sleep well at night knowing I’ve got protection on the downside, while still participating in the upside if the next big thing takes off.

Final Thought On Investing In Index Funds And ETFs

Index funds are great. I own multiple seven figures worth of them. You should too. But they are best suited for those on the traditional retirement track or those looking to preserve wealth.

If you want to achieve financial freedom faster or join the ranks of the Richest Rich, you’ll need to invest beyond index funds. Build something. Take risks. Own more of your future.

That’s how the richest people do it.

Free Financial Analysis Offer From Empower

If you have over $100,000 in investable assets—whether in savings, taxable accounts, 401(k)s, or IRAs—you can get a free financial check-up from an Empower financial professional by signing up here. It’s a no-obligation way to have a seasoned expert, who builds and analyzes portfolios for a living, review your finances.

A fresh set of eyes could uncover hidden fees, inefficient allocations, or opportunities to optimize—giving you greater clarity and confidence in your financial plan. The richest people in the world get regularly financial checkups.

The statement is provided to you by Financial Samurai (“Promoter”) who has entered into a written referral agreement with Empower Advisory Group, LLC (“EAG”). Click here to learn more.

Diversify Your Retirement Investments

Stocks and bonds are classic staples for retirement investing. However, I also suggest diversifying into real estate—an investment that combines the income stability of bonds with greater upside potential.

Consider Fundrise, a platform that allows you to 100% passively invest in residential and industrial real estate. With over $3 billion in private real estate assets under management, Fundrise focuses on properties in the Sunbelt region, where valuations are lower, and yields tend to be higher. As the Federal Reserve embarks on a multi-year interest rate cut cycle, real estate demand is poised to grow in the coming years.

In addition, you can invest in Fundrise Venture if you want exposure to private AI companies like OpenAI, Anthropic, Anduril, and Databricks. AI is set to revolutionize the labor market, eliminate jobs, and significantly boost productivity. We’re still in the early stages of the AI revolution, and I want to ensure I have enough exposure—not just for myself, but for my children’s future as well.

Fundrise investment amount by Financial Samurai, Sam Dogen. New $112,000 investment on June 20, 2025

I’ve personally invested over $400,000 with Fundrise, and they’ve been a trusted partner and long-time sponsor of Financial Samurai. With a $10 investment minimum, diversifying your portfolio has never been easier.

To increase your chances of achieving financial independence, join 60,000+ readers and subscribe to my free Financial Samurai newsletter here. Financial Samurai began in 2009 and is the leading independently-owned personal finance site today. Everything is written based off firsthand experience.

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Save More Than 80% on This Adobe Acrobat + Microsoft Office Pro 2021 Bundle

Disclosure: Our goal is to feature products and services that we think you’ll find interesting and useful. If you purchase them, Entrepreneur may get a small share of the revenue from the sale from our commerce partners.

Running a business means working with documents, presentations, spreadsheets, and contracts daily. Having the right tools in place can make or break efficiency, and that’s exactly what this offer delivers.

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Why business leaders should pay attention

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Why business leaders should pay attention

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The Most Common Tax Planning Mistakes For High Earners

If my posts on the mistake of chasing value stocks or the need to invest big money to make life-changing money don’t resonate, consider hiring a financial professional to manage your portfolio. You may not be obsessed enough to consistently invest the amount needed to retire comfortably. Offloading the burden of investing frees up your time and energy to focus on work, family, and hobbies.

At this moment, I’m preparing to do my taxes again. Every year I file an extension (Oct 15 deadline) because of delayed K-1s from private fund investments. So when Empower reached out about highlighting tax planning mistakes for high earners, I agreed. It’s a topic I know all too well.

What I didn’t realize is that Empower offers tax planning as part of its standard client service. No extra invoices, no $300/hour CPA bills. Just integrated advice, included in the management fee. Considering that taxes are often the single largest expense for high-income earners, having proactive strategy baked in is a big deal.

The Importance Of Tax Planning For High Income Earners

When you’re a high earner—think $250,000+ income or the potential to get there—you’ve probably got a lot on your plate: investments, real estate, maybe a business or two. What you might not be paying enough attention to? Tax planning.

It’s not sexy like a moonshot AI stock, but the compounding effect of smart, consistent tax moves can rival investment returns over time. As Empower Personal Wealth specialist Scott Hipp, CPA, CFP® explains, for high-income, high-net-worth clients, tax planning isn’t about chasing one-off loopholes, it’s about proactive, coordinated, year-round strategy.

Let’s dive into four key questions Scott answered that reveal just how much value smart tax planning can deliver. If you’re searching for a financial professional to manage your wealth, choosing one that integrates tax planning into their service is essential, not an add-on.

Empower has been a long-time affiliate partner of Financial Samurai, and I personally consulted for Personal Capital (later acquired by Empower) from 2013 to 2015. I’ve seen firsthand how incorporating tax strategy into wealth management can meaningfully boost long-term returns.

1. Why is tax planning critical for high earners?

When you’re in the top federal tax brackets—32%, 35%, or 37%—every strategic move counts more. Saving 1% on taxes for someone making $100K is nice. Saving 1% for someone making $800,000? That’s four first-class tickets to Hawaii with a couple thousand left over.

Scott says most people think of tax planning as a once-a-year scramble or a hunt for magical loopholes (“I heard Uncle Bob pays zero taxes because he made his dogs employees…”). The truth: the biggest gains come from small, consistent, legal moves year after year.

It’s like The Shawshank Redemption: pressure and time. Maxing out a health savings account, backdoor Roth contributions, charitable “bunching,” and tax-loss harvesting may seem minor in isolation, but over 20 years, they can carve a serious tunnel toward financial freedom.

Here’s the danger: by the time you file in April, most opportunities are gone. If you’re filing 2025’s taxes in April 2026, your deadline for most strategies was December 31, 2025. That’s why Empower’s team works year-round—advisors and tax specialists meet regularly to tweak and optimize before the clock runs out.

2. What’s the deal with the SALT deduction changes?

The State and Local Tax (SALT) deduction cap got a temporary boost after the passage of The One Big Beautiful Bill Act on July 4, 2025. It’s $40,000 in 2025 (up from $10,000), rising slightly each year until 2029, before reverting in 2030.

Who benefits? Mostly taxpayers with AGI under $500K in high-tax states. Hit $600K AGI, and the expanded cap phases out completely.

But even high earners over $600K aren’t out of luck—if you own a pass-through business (S-corp, partnership, LLC taxed as such), you might use the Pass-Through Entity Tax (PTET) workaround. Here, the business pays state taxes, making them fully deductible federally, and you get a state tax credit. As of 2025, 35+ states have a PTET option.

For the right clients, SALT changes + PTET can unlock deductions worth tens of thousands—money that stays in your portfolio instead of the IRS’s coffers.

3. How does Empower approach complex high-earner situations?

Let’s say you’re a business owner with significant investment income, passive rental income, and real estate holdings.

With Empower, you basically have a “tax specialist on demand” baked into your fee – no surprise bills. The process starts with:

Reviewing the past three years of returns for missed opportunities. (You’ve got three years to amend and claim a refund.) Empower can spot thousands in overlooked deductions.
Holistic planning based on your goals. Tax strategy isn’t in a vacuum—it’s tied to your investment plan, estate goals, and cash flow needs.

Common missed opportunities for self-employed clients:

Not deducting health insurance premiums.
Missing the Qualified Business Income (QBI) deduction.
Ignoring home office deductions.

More common errors Empower can help catch:

Capital loss carryforwards lost when switching preparers/software
Incorrect Backdoor Roth processing
Missed Foreign Tax Credit
Wrong cost basis for stock sales (ESPP, options)
HSA distributions taxed in error

From there, Empower looks forward—maybe setting up a solo 401(k), timing income, or planning capital gains. The idea is to create an ongoing tax playbook, not just fix past mistakes.

4. What real-world tax savings have clients seen?

Missed health insurance deductions are surprisingly common—and costly.

S-Corp owner: CPA added health insurance premiums to W-2 wages (correctly) but never told the client they could deduct those premiums above the line. Amending three years’ returns saved ~$6,000 in federal taxes.
Sole proprietor: Deducted health insurance as a Schedule A itemized deduction, but couldn’t benefit due to medical expense thresholds and not itemizing at all. Amending saved ~$7,500.
Medicare premiums: Many don’t know they qualify as self-employed health insurance deductions. Catching this can save $1,000+ per year.

These aren’t flashy hedge-fund-like wins—but they’re guaranteed returns via tax savings, often compounding over years.

Key Strategies Empower Uses for High Earners

Scott shared a few proactive moves that come up again and again:

Bunching Charitable Contributions

Standard deduction in 2025: $15,750 (single) / $31,500 (married). By combining two or more years of donations into one tax year, you can exceed the standard deduction, itemize that year, and take the standard deduction the next—resulting in a bigger total deduction over time.

Bonus: Donate appreciated assets or use a Donor-Advised Fund for even more efficiency.

Tax Loss Harvesting

Selling investments at a loss to offset gains elsewhere—then reinvesting in similar (but not “substantially identical”) assets—can lower your current-year tax bill while keeping your portfolio allocated. All Empower Personal Strategy clients ($100K+) minimize your tax burden with proactive application of tax-loss harvesting and tax location.

Roth Conversions

Moving funds from a traditional IRA to a Roth IRA lets you lock in today’s tax rate if you expect to be in a higher bracket later. Future withdrawals? Tax-free. This is especially powerful in lower-income years before RMDs kick in.

Saving Money On A Good CPA

A good CPA might charge $150–$400/hour just for tax consultations. Meanwhile, many don’t offer proactive planning at all, focusing instead on compliance and filing.

Empower builds tax planning into its overall wealth management service for clients with $100K+ in investable assets. That means:

One fee, one integrated plan.
Advisors and tax specialists in the same room (or Zoom) all year.
Proactive calls before the deadlines—not “we’ll see you next April.”

The Bottom Line

Big investment wins get the headlines, but year after year, quiet, boring, proactive tax moves can be worth just as much, sometimes more. For high earners, ignoring tax planning is like leaving compounding on the table.

If you’ve got $100K+ in investable assets, Empower is offering Financial Samurai readers a free consultation. Even if you’re confident in your current plan, a second opinion could uncover thousands in missed opportunities.

For a limited time only, book your free, no obligation session here. An Empower professional will review your investments and net worth, and offer some suggestions on where you can optimize, all for free.

Empower’s Tax Optimization Services

Tax optimized investing (tax loss harvesting, tax location, tax efficiency): available to clients investing $100K+.

Tax planning guidance (analysis and recommendations – identify gaps and opportunities in your tax strategy before you file with your advisor and tax specialist): available to $250K+.

At $1M+, clients receive the above, in addition to access to a CPA, at no additional cost.

Disclosure: This statement is provided by Kansei Incorporated (“Promoter”), which has a referral agreement with Empower Advisory Group, LLC (“EAG”). Learn more here.

To expedite your journey to financial freedom, join over 60,000 others and subscribe to the free Financial Samurai newsletter. Financial Samurai is the leading independently-owned personal finance site today, established in 2009.

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How To Eliminate That Intense Financial FOMO You’re Feeling

Back in 2012, I thought I had finally conquered financial FOMO after walking away from a well-paying finance job. But after having children, I’ve noticed more and more relapses. If you’ve found yourself battling the desire for more money than you truly need, this post is for you.

Ever since returning to San Francisco from our 36-day trip to Honolulu, I’ve been feeling a greater sense of FOMO. The first week back hit especially hard when Figma IPOed and surged 333% on its first day. Suddenly, we were right back to frenzied markets, with retail investors piling in at sky-high prices.

In Honolulu, my focus was on mainly three things: 1) family, 2) exercise, and 3) remodeling my parents’ in-law unit. Those three priorities consumed all my bandwidth. Between supercommuting and construction, I was spent most days, with little time left to think about chasing investments.

Pickleball and then the beach were my escape. While waiting for the next game, conversations revolved around recapping rallies, kids, or which store sold the best Pirie mangoes. Careers and investments never came up, except when I asked a couple players about Honolulu’s cost of living. The vibe was refreshingly present, grounded, and calm.

The Return Back Was Somewhat Jolting

I had never taken my family on such a long trip before, so the contrast with life back home was especially clear.

With just the four of us at home, family logistics became simpler, familiar camps smoothed out childcare every other week, and the remodeling burden was finally lifted. With all that mental headspace freed up, my mind inevitably drifted back to the markets and to the unsettling realization that the AI boom was racing ahead without me.

On the pickleball courts here, the chatter couldn’t have been more different. Nearly everyone was talking about tech stocks, the bull market, and the next big AI play. Why? Because nearly everyone either works in tech or invests heavily in it. There was no escaping the mania. I found myself longing for the calmer rhythm of Honolulu again.

The Moment That Reduced My FOMO Tremendously

Then something unexpected happened that broke my financial FOMO fever. The first weekend back home, I went to a neighborhood gathering at a local park. Familiar faces were everywhere, including one dad I occasionally hang out with. He works in venture, so I asked whether he ever felt the same financial FOMO I’d been struggling with since returning.

He shrugged. “Kinda, but not really.” Why would he? He spends his days looking for the next big winner, so opportunities are always flowing across his desk. Though he did mention once passing on a company that went on to be a huge success.

That surprised me. If anyone should feel FOMO, it’s investors who had the chance and said no, far worse than never getting a look at all, which is the reality for most of us. If I never had the opportunity, then there was no missing out in the first place. But it also made sense he didn’t feel much financial FOMO since he was already immersed in the hunt for more.

We kept chatting. He asked how my summer had been, so I shared some stories from our time away. Naturally, I asked about his summer too, expecting to hear about some big trip since his family had traveled a lot before. But instead, he told me they hadn’t gone anywhere. He’d been too busy working. Two months into summer, and he was still grinding away.

That was my “ah hah” moment. Suddenly, my financial FOMO evaporated. Here was someone, at least twice as wealthy as me, stuck at home because of work. It reminded me of my banking days, when I had to ask for permission to take vacation—like a kid asking his parents for pocket money. What a crock!

I’m sure his hard work this summer will make him millions more. But he’s already rich. At our age, I don’t want to sacrifice too much time with my kids for incremental wealth that won’t materially change our lifestyle. 18 summers isn’t a lot. I’ve got enough passive income to cover our family’s basic needs. That freedom, I was reminded, is worth more than chasing the next big score.

The Six Steps To Reducing Your Intense FOMO

Financial FOMO comes from comparison, insecurity about our own progress, and the fear of missing a once-in-a-lifetime opportunity. It tends to peak during bull markets, when it feels like everyone else is getting rich except you.

I’m not sure anybody is truly immune to financial FOMO. You can be wealthy, financially independent, retired, or even work in venture capital, and still feel it. But FOMO left unchecked can push you into bad investment decisions, such as buying at peaks, overextending on margin, or constantly second-guessing yourself.

Here are six tactical yet practical steps that may help you manage FOMO better:

1) Build a Core Portfolio You Rarely Touch

One of the best ways to combat FOMO is to remind yourself that you already own a piece of the future. If you’re invested in equities, real estate, Bitcoin, or venture, you’re covered. Even holding something as simple as the S&P 500 means you’re participating in the ongoing growth of our economy. The exact mix of your asset allocation is up to you. What matters most is having a stake in assets that can carry you forward, so you don’t feel pressured to chase every hot new opportunity.

I keep the bulk of my public equity investments in broad index funds. Meanwhile, about 40% of my net worth in real estate, and 15% in private companies.With a solid core, it becomes much easier to tune out the noise and ignore the hype cycles.

For example, if AI truly sparks a wave of IPOs, new startups, and thousands of newly minted millionaires, at least my San Francisco real estate should benefit. I recently experienced a rental bidding war for one of my properties and that’s before the AI IPO wave has even arrived. Investing in the picks and shovels helps ensure you will financially benefit, no matter what.

2) Allocate a “FOMO Fund”

Instead of trying to suppress the urge to participate, give yourself permission, but with guardrails. Roughly 40% of my public equities are in individual growth names, mostly tech. This way, when I see headlines about breakthroughs, like quantum computing, I feel like I’m part of the story rather than left on the sidelines. Of course, during the next correction, I will also lose more than the average index fund investor too.

I’ve also carved out a dedicated “FOMO Fund”—about 5% of my overall portfolio—for speculative money. That’s where I can dabble in individual private companies, new venture funds, or even short-term trends. If it pays off, great. If not, it won’t derail my financial plan. By containing the risk, you scratch the itch while protecting your long-term wealth.

3) Systematize Your Investing With Automation

One reason FOMO hits so hard is because investing often feels optional and emotional. A simple antidote: automation. Dollar-cost averaging into index funds, ETFs, individual stocks, or funds removes the decision-making stress. When money flows into the market on a schedule, you don’t sit around debating whether to chase the next hot stock. Instead, you’re already steadily invested, no matter what the headlines say.

For example, after opening a new personal Innovation Fund account earmarked for my kids with $26,000 ($500 bonus if you invest over $25,000), I enrolled in auto-invest at $2,500 a month. It’s enough out of my cash flow to feel involved without feeling strain. One year later, that’s $30,000 invested; after 10 years, $300,000.

Without automation, it’s easy to fall off track because life gets busy. I have over 30 investment accounts to manage between the four of us. Inevitably, I’m going to miss something, which is why automation is so important to free up mental bandwidth.

I’m concerned my kids may have little chance of becoming financially independent on their own in an AI-driven, hyper-competitive world. Therefore, every dollar I automate for them helps reduce that concern, while ensuring their money is working even if I get distracted.

Make investment contributions automatic through monthly auto-investing to help you reduce financial FOMO

4) Use Opportunity Cost as a Filter

Before jumping on the next hot idea, I try to ask: What am I giving up if I do this? Am I sacrificing cash flow, peace of mind, or time with family? Am I risking capital I’ll need in five years for housing, education, or flexibility? During bear markets, I certainly get a little more moody. By forcing yourself to weigh trade-offs, you realize some FOMO-driven decisions don’t actually pass the test. I

As someone who enjoys investing more than spending, this opportunity cost exercise often flips for me. I tend to think instead: What is the opportunity cost of spending money on something I don’t really need versus the potential returns if I invested it? Buying this unnecessary $120,000 Range Rover could turn into $300,000 in five years if invested well!

Still, the reality is that not all investments work out, especially the most speculative ones. Corrections and bear markets are a natural part of investing. Which is why it’s worth asking a different version of the question too: What are the joys I’m giving up today in exchange for an investment that may never pan out? That balance helps keep you grounded, whether you lean toward spending or investing.

Losing Money Quickly

Just look at the Figma IPO. I suspect FOMO drove many investors to pile in on day one, paying $100–$133 a share. Fast forward just a few weeks, and the stock is already down about 40% from its peak. I would much rather have spent $25,000 on a memorable family vacation than invested it in Figma and watched $10,000 vanish in two weeks. YOLO!

Chasing hot IPOs at extraordinary valuations is dangerous, so please be careful. Instead, consider investing in these companies before they go IPO so you can sell to investors who experience maximum FOMO.

Always remind yourself that you can and will lose money when it comes to investing in risk assets. Sometimes, this fact is easy to forget during a bull market.

How to reduce financial FOMO and not chase hot IPO stocks like Figma

5) Define “Enough” Clearly

FOMO often creeps in when you don’t have a clear baseline for what success actually means to you. If your target is always a vague “more,” then no matter how much progress you make, someone else will always appear to be ahead – whether it’s their bigger house, higher net worth, or latest hot investment. That mindset makes contentment impossible.

What helps is defining enough. For me, that’s when passive income reliably covers our family’s basic living expenses. Once that box is checked, every dollar beyond is truly optional. I can put it toward growth investments, donate it, or try to spend it guilt-free on experiences.

After I hit a passive income target, I try and shift my mindset back toward an early retirement lifestyle. This means less striving, more enjoying. Anchoring to “enough” quiets the noise, and reminds me that I’ve already got enough.

Once you know your number and can sustain your lifestyle, you realize chasing endlessly isn’t freedom, it’s another form of bondage.

6) Change Your Environment

Finally, FOMO isn’t just about the markets, it’s about the people around you. Living in go-getter cities like San Francisco or New York means you’re constantly surrounded by the most ambitious and competitive people. Many of whom are making big money in tech, finance, or startups. The conversations, the headlines, even the birthday gatherings, it all feeds into a sense that you’re in this constant battle where you’re often falling behind.

One way to dial that back is to physically change your environment. Moving to, or even spending extended time in, a slower-paced city or town gives you space to breathe. Suddenly, not everyone is talking about the latest IPO or AI fundraise. Conversations shift to family, community, or quality of life.

It doesn’t mean giving up ambition or opportunity, you can still build wealth anywhere. But by lowering the ambient noise of competition, you reduce the constant comparison game that fuels financial FOMO.

Final Thoughts On Getting Rid Of FOMO

Markets will always swing from euphoria to despair, and there will always be someone making more money than you. But with a sound core portfolio, a small space to take punts, and a clear definition of enough, you can stay disciplined while still scratching the investing itch.

FOMO doesn’t disappear, but with the right systems, it can be managed so it doesn’t manage you.

Readers, do you experience financial FOMO? If not, how do you manage it so you don’t feel like you’re constantly missing out on financial gains? Interestingly, the vast majority of people I speak with in real life say they don’t really struggle with financial FOMO. That makes me curious — what strategies do you use to tame this beast?

Invest in AI So You Don’t Get Left Behind

AI is set to disrupt the labor market in a massive way, for you and for your kids. One way to hedge against that disruption is to invest in AI itself.

With Fundrise’s venture capital product, you can gain exposure to leading private AI companies like OpenAI, Anthropic, Databricks, Anduril, and more. The minimum investment is just $10, and new accounts currently get a $100–$200 bonus.

I recently opened a new account for my children with $26,000 and will auto-invest $2,500 a month for the foreseeable future. My hope is that by riding the AI wave, they’ll benefit from the very disruption that might otherwise work against them.

Fundrise is a long-time sponsor of Financial Samurai, and Financial Samurai is an investor in Fundrise products. Our investment philosophies are aligned. Overall, I’ve invested more than $350,000 in Fundrise Venture.

Fundrise Innovation Fund Financial Samurai investment amount and dashboard - Overcoming FOMO in AI by investing in AI — My current Fundrise Venture investment dashboard, excluding the $26,000 I recently invested for my children

Pick up a copy of my USA TODAY national bestseller, Millionaire Milestones: Simple Steps to Seven Figures. I’ve distilled over 30 years of financial experience to help you build more wealth than 94% of the population and break free sooner. When you’re ahead, that FOMO starts to disappear.

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