Do you take financial advice from social media?

suneeti@khaleejtimes.com Filed on August 18, 2021

How to manage your money smartly

Just a couple of decades ago, there was a culture of sharing ‘tips’ among friends and family for stock-picking and investing. People also relied on hearsay and took investment advice from ‘good investors’, on where to invest, when and how much, without contesting or raising many doubts. Needless to say, some have been lucky in their investment adventures and some not so much.

In 2008, when equity markets were on a roll in India, Satish had invested a good chunk of his savings in an IPO of a power company. He was advised by a friend who had made some ‘good calls’ previously, but this one didn’t fare well. “I am yet to recover my investment. I understand that equity investments are for the long-term but this one is a failed bet. Yet, this has been the biggest learning. I no longer invest without studying companies and I do not rely on uninformed suggestions anymore. I discuss points and try and know the rationale for advice on stock-picking or more recently on cryptocurrencies,” says Satish.

If decades ago, there were friends and ‘good investors’ to suggest, today there are scores of accounts on social media platforms dishing out financial advice on where to invest and when. Advice on digital assets and cryptocurrencies too is doled out in crisp video messages and social media cards. Surely, information in short, digestible video bites make unfamiliar and complex topics more palatable, how much of it should you really trust?

For people who are starting their work lives, short takes on Instagram, TikTok, Facebook, etc, might offer basic financial advice and can influence right kind of habits to start saving and investing early on. However, relying on social media messages from individuals who may not be qualified professionals in this domain can also be a recipe for disaster. Misinformation dominates social media, which can make it tricky for readers and viewers to be discerning.

“I am not sure of the authenticity of the accounts that I follow, but I find the basic advice relatable. I stay away from the investing bit honestly and concentrate only on the advisory part on how much should I spend on rent, EMIs, how to save up for car down payment, etc. Regular dose of such videos has pumped me to start saving at least 10 per cent of my salary. I wasn’t really doing that before,” said Raghav D., a resident of Dubai for five years. His friends have lost money in crypto bets, which has been a lesson for him.

Come to think of it, consistently sticking to the right behaviours is normally enough for a financially stable life. But if you’re looking to invest in complex financial products and building a portfolio in the long term, roping in financial experts is always advisable.

“Financial planning is an ongoing process that will reduce stress about money, support current needs and help build a nest egg for long-term goals, like retirement. It is an important activity to undertake because it allows people to make the most of their assets, and helps ensure they meet their future goals,” says Stuart Ritchie, Director of Wealth Advice at AES International.

“A good financial plan is guided by your goals. If you approach your financial planning from the standpoint of what your money can do for you, you’ll be more intentional with every dirham. Decide what you want your life to look like in 5, 10 and 20 years’ time. Try not to pay too much attention to the media or the latest financial trends, they’ll likely just serve to distract you from being disciplined and following your plan,” adds Ritchie.

Social media is a great tool to unwind. It helps connect with people and can be used to learn new skills and lessons. However, every advice, like in life, should be taken with a pinch of salt.

suneeti@khaleejtimes.com

author

Suneeti Ahuja Kohli

Suneeti Ahuja-Kohli has been in Dubai long enough to call it her spiritual home. She loves to travel but plans to settle down in Koi Samui, Thailand eventually to spend her sunset years by the sea. For now, she writes frequently on personal finance, retirement planning, business news and features, health and almost anything assigned by her editor. Her sojourns can be followed on instagram (suneetiahujakohli), news and views on Twitter @suneetiahuja, and for the rest, there’s a Facebook account.





 
 
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