Table of Contents
- Using social media for investment advice is a double-edged sword, experts say
- Some advice is good, but some is useless and there are few ways to tell the difference.
Now, more and more young investors are getting their investment ideas from Reddit, and the reliance on chat forums and social media sites for financial advice is increasing dramatically.
A quarter of 18-34 year-olds now get their investment ideas from social media platform Reddit, up from 17 per cent in 2021, This is Money can reveal.
While one in five investors now turn to TikTok for investment ideas, up from 12 per cent in 2021, exclusive data from Hargreaves Lansdown shows.
The use of traditional business financial sites is declining among this age group as a result of the popularity of social media.
Screen time: The number of people relying on social media to manage their money is increasing
In 2021, 43 percent of 18- to 34-year-olds obtained their financial information from financial company websites; now it’s just 29 percent.
It’s not just younger people who are turning to Reddit for investment ideas: the number of middle-aged people using social media sites for investment ideas is also increasing.
In 2021, only 5 percent of investors aged 35 to 54 said Reddit was an influence, but that percentage has now risen to 10 percent.
Meanwhile, the number of people aged 35 to 54 using Instagram to ask for tips over money has risen from 4 per cent in 2021 to 10 per cent, although TikTok usage appears to have declined among this age group.
Traditional financial websites remain popular as a source of information for older investors, ages 55 and older.
In 2021, 31 percent of investors said these websites were where they got their investment ideas. This year, that number has risen to 35 percent, closely followed by financial advisors (34 percent).
Newspapers remain a source of investment ideas, with 31 percent of those over 55 years old say they use them, but that figure is slightly lower than in 2021, when it was 33 percent.
Only about 1 percent of this age group Get investment insights on social media.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘The collision between social media and financial markets has been one of the most dramatic trends to emerge in recent years and shows little sign of easing.
‘Swiping through feeds for investment ideas is increasingly a favourite pastime among many younger investors, with TikTok and Reddit becoming more influential.
‘In many ways, it’s encouraging that social media is encouraging a more diverse range of investors to start investing their money in financial markets.’
Can you trust financial advice on social media?
This is Money recently revealed that financial influencers on social media sites are the second most popular place for under-25s to get financial advice.
More than a third of people in that age group said they relied on financial influencers, or “finfluencers,” as their primary source of financial information.
Financial influencers have a huge following on TikTok, where the hashtag #Fintok (short for financial TikTok) has amassed nearly four and a half billion views.
Despite their popularity, finfluencers may not be the most reliable source of advice.
Streeter said: ‘What’s worrying is that it’s often on social media posts or chat rooms where speculation about rising stocks and riskier investments is rife.
‘Interestingly, in the face of competition from social media, newspapers have been making efforts to attract this age group, and it seems to be paying off.
‘The number of investors aged 18 to 24 who get their investment information from newspapers has almost doubled, from 12 per cent in 2021 to 23 per cent this year.’
Research by Boring Money found that 9 percent of this age group said they would use an AI tool to get advice.
Holly Mackay, founder and CEO of Boring Money, said: “I think it’s not so much where you get your information, but who’s saying it.”
‘A quick Google search will tell you how much they know about finance and how much experience they have. There are fantastic people offering very useful information on social media, as well as some total idiots.
‘Cybercrime and fraud are rife, as are levels of misinformation. In general, I think anyone promising quick riches or guaranteed stellar returns should be ignored – sadly, sensible money management tends to be a lot more boring, so keep your financial influencers on the dull side.’
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