Why You Should Stop Taking Investment Advice from Social Media

A boom in young and overconfident investors has led to the rise of investment influencers on social media platforms, but following their advice blindly is not a solid strategy

Sunniva Kolostyak 11 June, 2021 | 4:46PM
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Reddit logoI am a big fan of social media – I use it to decide which clothes to buy, what food to eat, and even which landmarks to visit on holiday. So, it felt natural to let these online platforms tell me which assets to invest in too, especially after seeing how much money some people made in January.

Unsurprisingly, I have not been alone in starting my investment journey this year. Younger investors have been flocking to investment apps for the first time, with one in 10 Generation Zs (those born between 1997 and 2015) starting to invest as a direct result of the GameStop saga. And while I'm technically a millennial (just about) rather than a Gen Z, I completely get the appeal.

In the past 12 months, 16% of Gen Zs have started investing, according to research from F&C Investment Trust. Of those, 62% decided to invest in volatile “Reddit stocks” and 61% were planning to take riskier decisions, making it clear that younger people see social media as an effective tool for financial advice.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Sunniva Kolostyak  is data journalist for Morningstar.co.uk