Investing is like the goji berry to young Aussies

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August 30 2021
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New research provides a possible answer to why social media influencers are becoming the go-to destination for young investors.

Fears over the influence of financial advice via social media might be overrated, though its popularity as a resource for younger investors suggests more work needs to be done.

According to new research into the financial cultures of new investors released by RMIT and Western Sydney University, social media is only one of many resources relied on for advice by younger Australians.

“Many young adult investors are doing proper research, mainly using social media rather than seeing a financial planner/adviser. But most understood the risk of taking advice from social media and didn’t just blindly follow advice,” revealed RMIT senior lecturer Angel Zhong.

Comparing its popularity to that of the goji berry, Ms Zhong said that the research indicates that young people have a better grasp of investment and the benefits it can bring than previously expected.

Although some participants admitted to following “overhyped” social media tips when they first started investing, the research found that young Australian investors tended to ignore the social trading capacities of their respective digital trading platforms.

“Part of the satisfaction from investing was making their own decisions and investigating companies and industries; social trading and copying trades would take away that enjoyment,” the final report on the research said.

Following “finfluencers” on platforms like Instagram or TikTok was less about enacting specific advice and more about learning how to embrace and adopt the mindset of an investor.

“These profiles and accounts offered young adults investing ideas and experience insights, rather than providing direct advice,” the report said.

Alongside social media, podcasts were another highlighted learning tool by younger investors.

These findings complicate the existing concerns around the influence of finfluencers and their framing as algorithm-enabled pushers of unregulated financial advice.

Specifically, the research emphasised the importance of ensuring financial education was affordable.

“If financial education was not affordable, people would seek information elsewhere and social media‑driven profiles would fill this educational gap,” the report predicted.

According to the report, “regulating emerging platforms, digital advertising, and financial discussion on social media [is a necessary action] to ensure investors are educated, but regulation is only part of this work”.

The big takeaway here was that learning about investing and making financial decisions was an inherently social process, and that attempts to educate younger investors should keep that in mind.

“Where education is proposed, it must acknowledge the different ways that young adults learn through participating in digital finance cultures, through formal and informal learning practices,” the report said.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

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