Fintok: Is Using TikTok For Financial Advice Genius Or Deluded?

What are the TikTok generation learning about finance from the app that the rest of us may have overlooked? TikTok, it seems, is no longer a place for fun and entertainment only but also a platform for learning about finance. Finance, really? Apparently yes. TikTok’s hashtag #investing had over 3.3 billion views recently and research indicates the trend is not showing any signs of slowing down. Welcome to the world of FinTok.

Young investors have flocked to the stock- and crypto-markets in droves and are increasingly turning to TikTok for investment advice and financial know-how. Recent research shows that about 20% of Gen Z invested for the first time in the last 12 months: 50% of these new investors bought crypto-currencies and 60% bought at least one meme-stock too. That Gen Z likes this kind of investments is not surprising, as meme stocks tend to have low absolute prices (being establishment ‘underdogs’ and often heavily shorted) and crypto currencies can be bought partially, meaning that even with £20,- in pocket money, young investors (for under 18’s with parental approval only) can be ‘in the market’ with low nominal amounts and start their learning curve, phone in hand.

Deluded?

There is some fear from the established investment community about the veracity of some of the information on TikTok. Much of the financial know-how is dispensed by Fintok influencers, often without qualifications and learning on the go themselves. Neither is much of the ‘educational content’ on TikTok properly fact checked as the platform falls outside the realm of the traditional financial watchdogs. Vox recently published an article about the “terrible” financial advice circulating on TikTok and there are numerous other articles elsewhere mentioning the same issue. The important thing to do then is to learn to recognise what is true and what is, well, ‘terrible’. An obvious starting point is always to double- and fact-check the advice you’re being given on TikTok as well as to take note of the reputation of the influencer, even if this is time consuming and a little boring. And the most important of all, do not invest a penny more than you can afford to lose. Small beginnings are good.

Or genius?

But Fintok also has its benefits and clearly resonates with young people who, having some (first-hand) knowledge of the 2008 financial crisis, do not have much faith in bankers and fund managers and do not like paying their fees either. For this generation, TikTok is often their first and only source of education on matters relating to finance and the argument goes that, with lessons about useful financial information such as basic tax calculations, VAT receipts, compound interest and balance sheets missing from the school curriculum, surely the FinTok phenomenon is therefore a good one? Having access to financial material at a young age, and in a fun and entertaining way, is only breaking down the barriers to investing. Besides, who decided that finance should be boring and that investment reports must be these encyclopaedic tomes, riddled with jargon?