short-video content for just about anything on TikTok. In fact, this app has
become a popular place for individuals to learn
about personal finance and investing.
However, not all financial
or money management advice on TikTok can be considered helpful or good.
The issue is that more
nuanced information starts to become risky. And for beginners, it can be
difficult to separate topics appropriate to them from the ones they are not ready
to tackle just yet.
So when looking for
relevant, good financial advice on TikTok, here are three things you need to
remember:
Context is Important
Context matters, and
the same can be said for helping people understand the differences between
financial products.
Many personal finance
content on TikTok can be self-centered advice that lacks the context that many
financial experts use to help their clients grasp strategies and products and
how those can aid their situation and affect them in the long run.
So before you take
someone’s 60-second TikTok video on the best investment or retirement plan,
check their background first. See whether that person has another website that
would provide more information about them or the proper credentials to support
their story.
If they posted the
advice because it worked for them, instead of treating it as something that
would also work for you and everyone else, treat it as a basis for your own
research on the topic.
The Creator’s
Experience Matters
It can be challenging
to identify which creators on TikTok are real financial professionals and which
ones are amateurs. Furthermore, it turns out that several of the popular
personal finance influencers on the short-video platform lack the proper
credentials.
While there is no
condition to be officially authorized to provide personal financial advice,
individuals are typically required by financial regulators and governing bodies
to complete certification courses and have them renewed regularly.
The certificate would
prove that their financial expertise is reliable and up to standards.
Getting financial
advice from people who don’t have any real credentials is risky. Still, it does
suggest that you should consider it carefully and check whether the information
is accurate before making any decisions.
Watch Out for Day
Traders
There are many day
traders on TikTok, and you should try to avoid them as much as possible.
Day traders who provide
stock picks out on the short-video platform don’t always know whether their
advice would benefit the viewers absorbing the information. Note that giving
someone an idea and urging him to take action is entirely different from just
talking about an idea.
A well-thought-out investing strategy should
suit an investor’s risk tolerance. However, a content creator on TikTok would
not really know the risk tolerance of every single one of his viewers.
With one billion
monthly active users worldwide, the odds of personalizing investing content for
each TikTok user are pretty low.
Moreover, users of the
app should consider the type of stocks being endorsed. For example, if it’s a
penny stock that doesn’t have a lot of trading volume, that may be a red flag
for a pump and dump scheme.
This article was written by ForexLive at www.forexlive.com.