The dangers of social media financial advice
FinTok and “get rich quick” videos can look convincing, especially to young investors. A few checks tell you when advice online is really a scam.
Social media has opened the door for scammers and fraudsters to take advantage of people sourcing financial advice online. Under hashtags like “Fintok”, “Moneytok” or “howtoinvest”, there are millions of videos, some viewed billions of times, many presented by people with no financial qualification at all.
Many of these videos come across as get-rich-quick schemes, showing off cars, big houses or private islands, with catchy titles like “retire a millionaire” or “one stock that could make you rich”. They over-simplify complex processes and make it look easy to earn huge returns. In reality, financial advice should be tailored to your specific needs and circumstances — it is not a one-size-fits-all exercise, and the quick ways to make money often end in losses.
Six ways to scam-proof your investment approach
- 1An investment that requires you to recruit new investors to realise your own return is a pyramid scheme. Be wary of tiered investments with levels like bronze, silver, gold, platinum.
- 2If you don’t understand how an investment product generates its returns, and there are no clear underlying assets, be cautious.
- 3Fraudsters create urgency to limit how much time you spend researching. Anything sold as a “once-in-a-lifetime opportunity” should be avoided.
- 4Consider financial service providers with a decent, verifiable track record — most scams promise great returns without one.
- 5If the investment is not registered with a body such as the Financial Sector Conduct Authority, it is not regulated. Contact the FSCA to verify any entity that is new or not well known.
- 6If it seems too good to be true, it probably is. Trust your gut, and always consider getting independent advice before committing.
As a young investor, your biggest advantage is time. Starting legitimate investments early lets you benefit from the power of compounding and time in the market — building real, lasting wealth without needing a shortcut at all.
This article is general information and not advice. Silke Financial Services is an Authorised Financial Services Provider, FSP No. 12462.