Dubai: Being active and intentional with money helps you get the most out of it. But for many, money is confusing to manage and uncomfortable to discuss.
Scrolling through other people’s questions, issues, and advice can make the topic more normal and less frightening. This is when it can be hard to look away from the constant stream of financial success stories and advice on social media platforms.
It’s often content that promises more immediate wealth that gets more clicks. As a result, the platforms are now full of creators making market predictions and encouraging you to buy certain stocks or cryptocurrencies so that you can make a lot of money like they did.
Don’t expect to be able to copy their results, experts say. Research from the University of Toronto in Canada has shown that the average day trader loses money because they tend to buy and sell too late, and they don’t necessarily do so for good reasons either.
Social media platforms are also seeing an increasing number of people using these channels as a means of exchanging trading tips on stocks or cryptocurrencies with the most growth potential and therefore more worthy of investment. This is what has led to the current trend of memes stock.
The logic for using recommendations from social media influencers on any platform is simple, financial planners agree. The reasoning is that watching peers grow with their finances can encourage you to do the same, and it can spin the wheels.
Experts also recommend such platforms for exchanging ideas, such as brainstorming on passive income opportunities. With this strategy, people can choose what resonates with them.
Video tips on personal finance are now very popular
Media platforms are now also made up of experts making videos on how to get rid of credit card debt, explaining the difference between different investment products and encouraging young people to start investing for their retirement.
The Wall Street Journal recently reported that many financial professionals – and several users and videographers themselves – urge caution when seeking advice from this medium. It can be difficult to discern which users have actual financial history.
Additionally, billionaire influencers like Elon Musk and Mark Cuban are also tweeting about investments that can skyrocket and cause retail investors to buy high.
Can financial advice be posted on video platforms?
When it comes to investment advice, a little known fact is that paid video downloaders are required to make a mandatory declaration that the content is not business advice at the end of each of their videos when they post them to a website. public platform, according to telecommunications regulators in many key economies.
Since it is impossible for a video downloader to investigate every viewer’s investment portfolio and does not give a personalized recommendation, this could not be treated legally as “business” or “financial” advice in most. countries. Even if the downloader owns the “license,” this disclaimer should be included, according to the research.
In Australia (as in many other countries) you need some type of AFSL – Australian Financial Services License – to give financial advice. Most of the people who run business websites or video channels etc. do not have AFSL and clearly wish to emphasize that they do not offer any form of advice. It is legal protection.
This is mandatory even for a video downloader working with a brokerage firm or platform as an affiliate, due to what is known as an “affiliate agreement”. (A breach of contract requires the uploader or owner of the video not to get paid for members who accessed their video through the affiliate link.)
While it is recommended that most public video sharing platforms acquire some basic knowledge or understand how to resolve certain trading-related issues, the platforms notify through publicly available information on their sites. Web that they are not a platform that can promote negotiable information in the market, as a mandatory disclaimer.
A booming social media-fueled business movement
Many analysts believe that buying stocks on the basis of fundamental characteristics such as cash flow, management and return on investment has taken a back seat and is instead replaced by a commercial movement fueled by social media.
What is happening on such popular video sharing platforms is not a new phenomenon. Day trading (a form of speculation in which a trader buys and sells a financial product on the same trading day based on some news) has been around since the 1970s, and scams have been around forever.
People tend to evangelize risky investments during a rising stock market, when it is much easier to make money because the stock market is generally rising. During those times – and we’re living with them now – it’s also a lot easier to position yourself as a financial genius, when in reality everyone is making money too.
Financial Advisors also report that while it’s not that much of a concern to consume general budgeting tips, the investment tips found on these platforms are a bit more obscure and risky for vulnerable viewers to follow without further research. .
Verdict: To act on advice that is available for free or not to?
Videos of unverified claims that go viral might not be the best (and certainly shouldn’t be the only) source of information.
Regarding messages and responses, the quality of advice is mixed. According to a study of financial planners who frequently browse and respond to messages or videos on such forums, the consensus is that not all views are professional.
“Some posters have to be professional because their advice is perfect. But there is also a lot of advice that is best to ignore, ”explained Jeff Ledford, a certified financial planner based in the United States, according to the research mentioned above.
Other financial planners have also seen verified advice on such platforms, especially when it comes to basics like debt and cash flow management, but there has also been misinformation, about taxes, for example, the research indicated.
It is therefore difficult to say which advice is worth following and which is not. In fact, all of these platforms can be roughly classified as an unfiltered data dump with a lot of unverified information.
What works for one won’t necessarily work for you
Try to use these platforms more as a source of motivation or simple information than as concrete advice for taking action or investing your hard-earned money. In addition to the fact that much of the chain’s advice is unverified, planners point out that personal finances are in fact personal.
What works financially for a social media influencer or video downloader won’t necessarily work for you, given that your circumstances and experiences are different. You are responsible for your own decisions and for doing your own research.
If you are considering taking advice from one of these platforms, try checking it elsewhere first. Start with a Google search and look for web pages that cite the source of the information or advice.
For example, the page may describe a study supporting the advice, show a calculation, or quote an expert or organization.
Certainly, the ability of a social media platform to take a user’s video and show it to millions of people within hours or days is unmatched.
However, when it comes to personal finance advice, what happens is that users end up getting advice not from trusted sources, but from those who have ostensibly made money buying. and by selling a certain stock or product – which may or may not work. for you and therefore, is risky advice to adapt.