Has social media become the enemy of Gen Z's investment? Know how the way of investing is changing..

Social media is no longer just a means of entertainment, but is also changing the world of investment. This trend is especially visible in Gen Z, i.e., the generation born between 1997 and 2012. Today's youth are learning about the stock market, mutual funds, and cryptocurrencies from Instagram reels and YouTube shorts. The content of 'finfluencers' has now become more popular than traditional financial advisors or books.

The trust of the young generation in finfluencers is increasing.

These youth believe that finfluencers make difficult finance terms easy, so that even complicated things can be understood in minutes. This helps them in personal finance management. The young generation likes to follow these creators. Over time, their trust in such creators also increases.

48% Gen Z follow investment tips from social media
The CFA Institute report shows that about 48% of Gen Z learn about investment from social media, while only 30% reach out to professional advisors. One big reason is cost. Getting personal financial advisors is expensive, so youth consider social media content as an easy option.

However, this trend is not completely safe. CFA Institute's analysis found that of the finfluencer posts that had investment recommendations, only 20% openly stated that they were professionals or were taking money to promote a product.

80% of new retail investors came through mobile apps in the last two years
According to Redseer's 2024 report, 80% of new retail investors in India in the last two years have come through mobile apps, and most of them are under 30 years of age. Apps like Groww, Zerodha, CoinSwitch, and Kuvera have seen tremendous growth, especially in smaller cities.

SEBI warns

SEBI has warned several times that taking advice from unregistered influencers can be risky. In August 2023, SEBI issued rules that no registered intermediary can connect with unregistered influencers. Many influencers mislead the audience by blurring the line between education and advice. These people can promote products that fill their pockets, but put their followers, i.e., Gen Z, at risk.

Game of hype and FOMO

Investment in social media often runs on hype and FOMO, i.e., fear of missing out. If a stock or crypto goes viral, thousands of people invest in it without research. This is the reason why many times people ignore their ability and need to take risks.

Social media platforms show users more of the content they like. This creates an 'echo chamber', where people only hear opinions that match their thinking, and miss out on other important things.

Financial literacy is very important.
This trend has increased the need for structured financial literacy for the digital-first generation. SEBI has recently launched the Investor Risk Reduction Access (IRRA) platform to guide new investors. Free learning content is also available at places like Zerodha Varsity and NSE Knowledge Hub, but their reach and engagement are still not like that of social media influencers.

Social media is having a profound impact on the investment decisions of Gen Z. In such a situation, only trusted sources, regulated platforms, and financial education can show them the right direction.

Disclaimer: This content has been sourced and edited from NDTV India. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.