Why young people are using Tic Tac Toe for financial advice
Since the launch of TikTok in September 2016, it has grown rapidly, becoming a platform to reach young people around the world, providing not only a source of entertainment, but also information and even advice. FinTok has become a major source of financial news and advice. The reason is here.
Confidence in traditional financial advisors and institutional investors is low
Finance is always a top-down matter, where financial advisors and institutional investors act as information gatekeepers. In the past, if you wanted to invest, you had to find a fund or asset manager whom you trusted and they would invest in your favor. Often, a financial advisor would instruct you, and often, with that financial advisor they relate to the funds you are directed to, or still have, creating a conflict of interest. However, with the rise of social media and the sharp decline in trading costs along with zero-commission brokerage, retail investors like you and me have started making their own investments. Many of these investors are inspired by the poor performance of traditional funds. For example, a study found that most hedge funds fail and the normal life of a hedge fund 5 years. The Great Recession showed that many of the world’s best managers and institutional investors were sensitive to the same error they warned retail investors. With less trust, and more access to information than ever before, people are willing to build their own portfolios. The rise of passive investment as opposed to active investment is another sign of declining confidence in traditional financial advisors and institutional investors. People do not trust financial advisers and institutional investors like in the past.
The economic situation has deteriorated
In addition, Millennium and Zen-Z face a harsh economic environment, where traditional paths to financial freedom have largely been blocked. Getting a job, working hard and saving is no longer enough to achieve the American dream. Young people face high unemployment levels, rising inflation, wages that can’t hold up and even lower market returns. As a result, they need to be more active than their past generations in how they manage their finances.
One-third of people now receive financial advice from social media
Today, accordingly A survey From investment firm TIAA, one-third of people seek financial advice from social media platforms like TikTok, Instagram and Reddit before making a decision. In Canada, half of Canadians between the ages of 18 and 34 consult social media to help them make financial decisions. While social media makes many people think of pushing the untested ideas of incompetent influencers, there are many real experts on social media who can at least say that the game has their skin and they are trying their own ideas. Young people who get financial advice from social media are also benefiting from the wisdom of the crowd: although anyone on social media may be wrong, collective knowledge is rich and, in general, better than any single expert. Young people make their own decisions, such as turning and using their Individual Retirement Account (IRA) into a self-directed IRA. Gold IRA rollover To invest in gold. Others are investing in cryptocurrencies, which are largely avoided by traditional investors, and nonetheless, the best performing assets of the last decade. Social media has been able to find investment ideas that traditional doormen would never accept, and yet those ideas have worked. For young people who can pick bran from wheat, social media is a gold mine of great advice.
