Survey Of Retail Investors Shows The Blind Lead The Blind

A recent survey from MagnifyMoney, showed the youngest and least experienced investors use social media as the “most important” source of information.

We found that almost 6 in 10 Gen Z and millennial investors (age 40 and younger) are members of investment communities or forums, such as Reddit, and nearly half have turned to social media in the past month for investing research.” – MagnifyMoney

The findings:

  • Nearly 6 in 10 investors are members of investment communities or forums, such as Reddit or a group of like-minded investor friends.
  • YouTube is the top source for investing information among young investors, with 41% turning to the site in the past month. Other social media platforms are:
    • TikTok (24%),
    • Instagram (21%),
    • Twitter (17%),
    • Facebook groups (16%) and
    • Reddit (13%).
  • In all, 46% have used social media for investing information in the past month.
  • 22% of Gen Z investors say they were younger than 18 when they started investing, versus 8% of millennial investors. 
  • Only 36% of young investors plan to use that money for retirement. 35% will make additional investments, while 19% will use the funds to pay for a major purchase.
  • Nearly two-thirds (64%) of investors who are 40 and younger have withdrawn money from their investment accounts to spend. 

Considering that many of these individuals have never seen an actual “bear market,” such is the very definition of the “blind leading the blind.”

The biggest problem is the lack of research on investments. In many cases, investments get made on the recommendation of people who have a “large following.” The assumption is since they are “popular,” they are “smart.” Such is not necessarily the case.

Eventually, there will be a time to “sell.” Such is something most won’t learn from “social media” influencers.

Technological Pitfalls

One of the more significant disadvantages to investors today is changing the face of the investing process to gambling. While the speed and convenience of access to financial markets is a modern marvel, it is also problematic by leading to “risky behaviors” by tapping into the “dopamine effect.”

Not surprisingly, the younger the user is, the more gravitated they are towards investing “apps” and other technologies, which turns “investing” into a “game.”

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