As “influencers” spread across social media, beware of the pitfalls | Investments

0

Depending on where you look on social media, making money seems like easy. Learn how to buy UK property without cash, or acquire the basics of a day trader in 30 minutes, are two lessons on YouTube, along with a plethora of tips on how to make money with crypto. -cash. Meanwhile, “influencer”, with varying degrees of knowledge, have flourished on Instagram and TikTok.

But the standard of advice varies widely from sound, sound information on how to invest, to unregulated personalities offering quick and superficial catches without fully exposing the pitfalls of what could happen to your money.

It is a particular problem for young people. People between the ages of 18 and 34 are more likely to have developed an interest in investing from social media rather than traditional news websites, according to research by investment firm Hargreaves Lansdown.

So how can consumers make sure that what they watch and read is credible?

Influence investment

Social media platforms host a variety of personal finance tips and ideas. On TikTok, a space called FinTok has sprung up with tips on budgeting, Isas, taxation, and debt – among other topics – that have piqued the interest of young people who want to know how to better use their money.

At the same time, the platform has a reputation for hosting videos that promote volatile cryptocurrency investments. Last month, it banned the promotion of financial products and services such as currencies, cryptocurrencies, and investment services.

In April, the Financial Conduct Authority (FCA) warned social media sites that it could take action if they continued to promote risky, and sometimes fraudulent, investments to often inexperienced consumers.

He followed concerns over sites like YouTube, Instagram and TikTok, and the emergence of a new generation of mostly younger DIY investors who he says take big financial risks when investing. in cryptography and other high-risk products.

While the platforms also host established personalities who give credible advice, there is a “dangerous rubbish” of influencers without any skills or experience, says Sarah Coles of Hargreaves Lansdown.

“Social media is designed specifically to appeal to whoever uses it, so they see posts from people who look like them and speak in a way that looks like them, and they can join the conversation, so they can connect with each other. feel closer to the subject.

“It’s presented in small chunks so that everything is accessible, and the algorithms show us things specifically to pique our interest,” she says.

“The problem is, anyone can set up as an influencer. In fact, it makes their life easier if they are not regulated because no one is watching what they say, so they can say whatever they want, however they want.

“If you use social media and have the choice between sound advice from a regulated company, accompanied by a multitude of risk warnings that make everything terrifying, or simple 30-second advice from an influencer which makes it infallible, the temptation is to opt for the latter.

Know what to watch out for

With so much advice on social media, it’s worth keeping a few ground rules for deciding what’s worth and what’s not.

Who are they? You don’t need to be regulated to become a social media influencer. You don’t need any knowledge, skills or experience either. So approach personalities with a healthy degree of skepticism.

Popularity is not synonymous with success. Just because a video has 100,000 views doesn’t mean that’s advice worth following. If there are any that you think are valuable, use the videos as a starting point for doing your own research.

It is always safer to assume that someone is not an expert unless proven otherwise. The lack of regulation means people can say whatever they want on anything from buying to leasing to bitcoin.

Make sure you have the complete image. If someone tells you that they made 50% on a bitcoin investment last month, that would be true. But that’s also the case, the price of cryptocurrency has fallen by almost a third in the past four months.

It is important to have all the information at hand in order to make investment decisions, especially when someone can suggest that they have a sure-fire way to make money fast. It might not be that the influencer is trying to deceive, just that there isn’t enough space in the video to tell the whole story – or that he’s not knowledgeable enough.

Make sure it is not a scam. At a time when cyber fraud is part of everyday life, scams are increasing on social networks. In 2019, Action Fraud said more than £ 3million was lost in 356 scam ‘get-rich-quick’ schemes on Instagram over a five-month period, with most victims between 20 and 30 years old. The crooks promised high returns within hours. invest.

It’s not just about getting rich quick. Large rises will always attract attention – peaks in cryptocurrency being a particular example. But getting returns slowly, over time, while it may seem boring, can also transform your life in a matter of years.

Don’t rely on people who you think are like you. Many ordinary consumers share their savings and investing experiences. Focus on the quality of the advice, rather than a shared story.

Coles says, “We love hearing from normal people, and that’s the whole point of social media – it’s someone like you, who’s done something and can tell you everything about how they’ve done it.

“Part of the problem is finding other people like us, rather than looking for our expertise.”


Source link

Share.

About Author

Comments are closed.