"Keeping up with the Joneses" is a well-known expression referring to a comparison to one's neighbor/ friend as a benchmark for social status or for the accumulation of material goods. To fail to "keep up with the Joneses" is perceived as demonstrating socio-economic or cultural inferiority vis-à-vis peers. In context, most of you would agree that peer pressure is a very strong force to contend with and you would know many who fit this description. For example, their car has to be as fast as the other person’s, regardless of whether they enjoy speed or not. Their gadgets have to be the latest, regardless of whether they know anything about that technology or not. Their holiday destinations have to be more exotic than their neighbor’s, regardless of whether they will actually enjoy that place or not. Their kids have to have the latest toy in the market, regardless of whether they need it or not.

In keeping up with the Joneses, the sanest and the most rational person may take an irrational and un-informed decision. In the rat race to keep up with their social circle, peer pressure may pervade every aspect of their life including their investment decisions. 

So if friends are investing money in stocks and some strike gold, they are bound to immediately follow in their footsteps. However, chasing the latest “hot stock tip” or going by the current “investment fad” is not exactly the way to invest one’s hard earned money.  Such blind investment decisions taken under peer influence may prove costly if they go wrong. 

The best way to avoid a ‘Joneses’ trap is to set your own goals and investment preferences.  If required, one should speak to a professional financial advisor rather than mimicking peers whose goals and risk appetite may differ. An investment approach using SIPs or Systematic Investment Plans offered by mutual funds may be worth a look. Such investments done consistently over a long period of time help to meet your life goals as well as create wealth.

Information contained in this article is not a complete representation of every material fact and is for informational purposes only. The recipient is advised to consult its advisor/ tax consultant prior to arriving at any investment decision.