Share page with AddThis


Research finds social media influencing young investors

Caution tapeA worrying number of investors are relying on Reddit and TikTok for their strategies suggests a recent survey.

The study found that 56% of respondents aged between 18 and 34 said they get investment ideas from social media.

This is in contrast to 55-64 year olds, just 4% of whom use social media as a source of investment strategy, preferring to rely on newspapers and traditional media.

The survey was commissioned by UK asset manager Hargreaves Lansdown and canvassed 2,000 people in the UK.

Among the various social media sites, Reddit and TikTok were the most influential with younger investors.

Reacting to the results, Hargreaves Lansdown stated that while it was encouraging to see a more diverse range of investors entering the market, it was also concerning that people are using internet posts and chat rooms where “speculation surrounding hot stocks runs rife”.

The fact that Reddit, where the meme stock frenzy around GameStop originated, is so popular with young investors is especially worrying, said Hargreaves Lansdown.

“For some new investors, trading has become a game and a form of entertainment, rather than a well thought-out long-term investment strategy,” states the report. “The risk is that they could get their fingers seriously burnt by following the herd into highly risky purchases, which could scare them off investing in the future.”

This concern is also shared by the UK’s Financial Conduct Authority. In April the regulator issued a warning to social media sites that promoted risky or fraudulent investment schemes amid a concern over the growing influence of sites such as Reddit, Instagram, Facebook, YouTube and TikTok.

“If needed, we will take action,” said FCA chief executive Nikhil Rathi at the time.

©2021 fundsTech

Most read features

Roundtable: New age thinking

Our panel of experts discusses the state of innovation in the industry and whether technology and the pandemic have created a once-in-a-generation opportunity to change. Chaired by Nicholas Pratt.

Cryptocurrencies: Solving crypto’s sustainability problem

Cryptocurrencies like bitcoin have a huge carbon footprint but, as Nicholas Pratt discovers, environmentally friendly alternatives exist.

Inside view: Who owns the data?

SteelEye chief executive Matt Smith finds that firms’ increasing use of third parties to store and manage data is creating tricky issues over data ownership.

Proxy voting: Making every vote count

With stewardship more important than ever and digital technology to the fore, surely it is time to solve the problem of proxy voting? Nicholas Pratt investigates.

Interview: Rise of the robo-adviser

FundsTech talks to Nutmeg’s CTO, Matt Gatrell, about the role of technology in its online offering.

Sponsored Profiles

Are you being microserved?

As asset managers grapple with new digital technology, FundsTech talks to Calastone’s Adam Belding about the importance of software architecture and the benefits...

Sponsored profile: A question of trust

AcrobatsAs more firms adopt agile software development practices, Petra Roche of Metrosoft explains why trust is so important in making agility work.

Sponsored feature: Compliance and the case for agility

CheetahFundsTech talks to Janusz Lorenc, CEO of Metrosoft, about asset managers’ approach to compliance risk and the case for agile software development.

Sponsored feature: Outsourced dealing

On_targetFundTech talks to Amundi Services’ Romain Sauvage and Gianluca Minieri about an increased demand for outsourced dealing among fund managers, driven by...