Home Investment 1 in 5 investors are only using social media to research new investments

1 in 5 investors are only using social media to research new investments

by jcp
gawdo

A new report from personal finance comparison site, finder.com, has found that 1 in 5 (21%) investors are relying solely on social media sites such as Instagram, TikTok and Twitter to research new investments.

Younger age demographics are more likely to use just social media for investing tips, with 38% of 18 to 34 year olds doing this, compared to just 6% of those aged 55 and above.

More broadly, half of investors in the UK (51%) are using social media to help inform them when deciding what to invest in.

‘FinTok’ here to stay?

Contrary to what the Reddit-led Gamestop craze back in January suggests, the most popular social media platforms to get investing advice from are Youtube (21%) and Facebook (16%). This is followed by Instagram (15%) and Twitter (14%).

Despite being a relative newcomer, 12% of investors already use TikTok to get investing tips, while 11% use Snapchat. Surprisingly, only 1 in 10 investors use Reddit for advice (10%), although the platform has still had a profound impact on the price of certain stocks like Gamestop and AMC Entertainment.

News sites are the most common source of investing information

Other sources of information for amateur traders are investing news sites (26%), general news sites (24%) and a financial adviser (22%).

Interestingly, investors are marginally more likely to look for advice on the forums of investing platforms (22%) than from the companies themselves (21%). They are also utilising the newer idea of ‘copycat trading’, where investors on trading platforms make their portfolios public for other users to imitate (12%).

Amateur traders are also turning to financial advisers (22%) as well as family and friends for advice (18%).

Younger generations are the most prolific investors 

The report also looked at how many people invest across the UK, finding almost two-fifths of Brits (37%) say they currently invest, with a further 22% planning to do so at some point.

18 to 34 year olds are now the most prolific investors with almost half (47%) owning at least one type of investment. This drops to almost 4 in 10 (38%) 35 to 54 year olds, and around a quarter (27%) of 55+ year olds.

What the experts are saying in the report

The use of social media to spread investing information and tips is a hot button issue:

Makala Green, a chartered financial planner who founded Green Wealth Planning, is wary of meme stocks and using social media to learn:The internet forum drives a new phenomenon with the digital age community, which means investors are likely to not be experienced, which can be extremely risky. Many invest purely for monetary gain with little knowledge of investing, leading to unknowingly taking on too much risk and potential losses. Considering the above, it is fair to say meme stocks is a boom waiting to bust.”

Elvire Mavusi Matu, a social media content creator, believes that these mediums are here to stay and are actually benefiting traders:
 “Using social media as a tool to promote investing can be a positive thing as more people start talking about it and research the topic… Social media has become an extremely important part of the investment world and with great hype they can go viral overnight such as meme investing.”

Author of the report and investment writer at finder.com, Zoe Stabler, said: While it’s always a positive to get young people interested in their personal finances, there’s the concern that the tips offered cross over the line between financial guidance and financial advice, which they often aren’t qualified to give, and don’t have experience in.

“There’s nothing wrong with supplementing your research with forums and social media, as long as you’re not completely substituting it. It’s always wise for anyone who is thinking or has started to invest to explore all options and do thorough research with a variety of different content types before making a decision.”
To see the research in full visit: https://www.finder.com/uk/how-to-start-investing#reddit-paper

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