Younger Americans are the most likely to be using social media for information on investments and other financial advice and this approach is frequently risky.
A new analysis of social media video posts relating to investing in equities highlights just what a ‘wild west’ major platforms are in this regard, with users attracted by hashtags promising the next big stock pick.
Social Capital Markets looked at more than 2,700 stock-related videos on YouTube, TikTok, and Instagram and found a startling level of misinformation and lack of basic messaging around claims being made.
More than eight in ten videos omitted disclaimers informing viewers of the risks of investing, while seven in ten did not give context to the specific stock investments they were recommending and again, often without warning of the risks.
Worryingly, almost six in ten videos promised guaranteed returns and 45% suggested a specific proportion of income should be invested.
The analysis also found that just 13% of the videos were from sources with the relevant qualifications or credentials to offer financial advice.
The report reveals that 91% of the TikTok videos included lacked disclaimers along with 88% of those on Instagram and 76% of the YouTube videos. For encouraging particular stock purchases, YouTube was the worst with 75%, followed by TikTok (70%) and Instagram (65%).
Overall, TikTok is deemed the worst with a higher rate of videos promising guaranteed returns and recommending specific percentages of income should be invested.
The study was conducted by a team led by Sudhir Khatwani who has made significant contributions as a Programmer Analyst at Cognizant, where he worked on critical projects for leading financial institutions like MUFG and CITI Bank.
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