There are so many people out there amassing a following on social media but that doesn’t make them experts. While they can share their experiences in investing and what worked for them, they certainly cannot dole out investment advice. There are so many social media influencers dishing out advise on weight loss and eating right. A study in UK actually examined the 9 biggest influencers and found that 90% of them presented opinions as facts or failed to provide evidence-based reference for their claims. Thus concluding that these top blogs were not credible resources for weight management. In the case of the YouTuber, she is simply giving her opinion that MFs will return 16% but has no data to support the same and hence cannot be blindly believed. Also, most influencers are paid for promoting certain products and there are no rules in India to provide disclosure about the same. You may decide to follow an influencer or a blogger but keep in mind the following:
Social media influencers are not certified to give recommendations on money management. Would you follow medical advise given on social media or go to a doctor? I would think a majority would go to a doctor because he/she is an expert in his/her field. There are registered investment advisors who can draw up financial plans and give you investment advise. You need to use their services instead of someone, who got lucky with some investments.
Everybody’s financial situation is different. What works for someone may not work for you. When the influencer talked about 16% return, did you question what is the risk associated or the investment horizon to achieve these returns or if the product is tax efficient (in case of the RD)? Half-baked information doesn’t work in personal finance.
You still need to know the basics. Every mutual fund does not invest in stocks and certainly, a mutual fund cannot give guaranteed returns. Reading up the basics is very important before investing in any product. Always compare the return on bank deposit rate with the rate being offered on another product. If FD gives 8% interest for 3-year period, someone giving 16% has to take a lot of risks to do so. Even with the blogger, he may have done some research and suggested a fund, but does this fit in your investment criteria? Further, is the blogger giving updates on the funds recommended? He may not and you cannot expect him to do so. Only financial advisors can do so.
It is high time regulators too come down on this quack advice being given by social media influencers, which is doing more harm than good to investors.
Photo Credit: ThinkstockSource: Article written by Mrin Agarwal in DNA Money
Originally published on: 26 June 2019