Don’t Believe Everything You See: The Risks of Financial Advice on Social Media
In the last decade, we’ve seen a dramatic shift in how people access financial planning and investment advice. One of the most interesting developments has been the rise of financial “influencers” and advice shared through online platforms like TikTok, Instagram, YouTube, Reddit, and X. While many of these content creators include a disclaimer that their content is “not financial advice,” let’s be honest – it sure sounds like it is.
This trend is a relatively new phenomenon in the world of financial planning, and it’s changing the way people make decisions with their money. But before you take that next hot tip or investment suggestion at face value, here are a few critical points to keep in mind.
Be Wary of Hidden Agendas
It’s essential to understand exactly what is being recommended – and why. Many content creators, especially those touting specific stocks, funds, or cryptocurrencies, may already have a financial stake in what they’re promoting. Legally, they are required to disclose if they have a position or are making a market in a particular investment. But that doesn’t mean every viewer catches or understands that disclaimer.
They may have purchased at a lower price and are hoping others jump in to drive the price up. While not everyone engages in this behavior, it does happen, and you should approach these recommendations with healthy skepticism. In short, make sure you know what’s really going on behind the scenes before you make any decisions based on someone’s TikTok or tweet.
Ask Yourself: Why Are You Seeking Financial Advice Online?
We get it – sometimes you just want a quick answer. Maybe you’re fresh out of college, just started a new job, or are curious about how to start investing. But before turning to social media for advice, take a moment to think about what you’re really after.
Are you hoping to make a quick profit through speculation? That’s a valid strategy, but it comes with significant risk. Or are you looking for a long-term, intentional approach to building wealth over time? That takes a different mindset, one focused on consistency and planning. Either way, it’s crucial to understand your goals and motivations before diving into the noise of online content.
Understand the Risks – and What You’re Working Toward
Every investment decision should start with one basic question: What are you trying to achieve? Are you saving for retirement? Growing your existing principle? Planning for a large purchase or college savings? Identifying your goals makes it easier to filter out advice that doesn’t apply to you.
Also, make sure you understand the risks involved. What happens if things go south? Can you exit your investment quickly? Is it liquid or are there restrictions that could keep your money tied up? Too often, people get excited about the upside without considering the downside, and that can lead to costly mistakes.
Let’s Talk About It
If you’ve come across new financial ideas or investment opportunities online and want to better understand them, we’re here to help. Whether it’s something you saw on social media or a strategy you’ve been thinking about, the North Main Financial Group team is here to meet you at your point of need.
If you have questions about financial planning or would like to review your financial space, call us at (704) 987-1425 or visit us virtually at www.northmainfinancial.com. If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.
These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Osaic Wealth.
