Investment advice is everywhere on social media. Spend a little time scrolling through TikTok, Reddit, YouTube, or Facebook, and chances are someone will tell you which stock is about to explode, why you should buy crypto, or where you should put your money next. The problem is that consuming all of that information might make you feel much more knowledgeable about investing than you actually are.
Researchers from the University of Georgia found that people who turned to social media when making investment decisions tended to rate their own financial knowledge highly. When their knowledge was actually tested, however, that confidence didn’t quite hold up. The researchers saw a very different pattern among people who primarily got investment information from traditional sources such as newspapers, magazines, television, and radio. Their confidence was more closely matched by their actual understanding of investing.
Social media may be creating an investing confidence gap
The findings come from an analysis of two national surveys covering more than 2,500 US adults who held investments outside their retirement accounts. Participants first rated their own investing knowledge before answering 11 questions designed to test it. Those questions covered topics including stocks, bonds, index funds, risk and return, options, and short selling. More than a quarter of respondents said they used social media to learn about investments, while roughly one in five said it influenced what they invested in. The study also found that people using social media for investment information tended to trade more frequently.
That last part is particularly interesting. Seeing a constant stream of people discussing hot stocks, crypto, or the next supposedly huge opportunity can create pressure to act quickly. Researchers point to FOMO as one possible explanation for why social-media-driven investors may trade more often. Importantly, the study identifies associations rather than proving that social media directly causes overconfidence or additional trading.
That doesn’t mean you should ignore financial advice online
There is an upside to having financial conversations all over social media. Investing can be intimidating, and platforms like YouTube and Reddit can make complicated ideas feel more approachable. The trouble starts when an easy-to-understand post gets treated as the entire picture. Unlike regulated financial professionals, practically anyone can share investing advice online. A 30-second video might explain the basic idea behind an investment, but it may leave out the risks, finer details, or whether that investment makes sense for a particular person.
The researchers aren’t suggesting that people stop using social media for financial information. Instead, the takeaway is to treat it as a starting point, not the final word. That distinction matters most when your money is on the line. Social media might make investing easier to discover, but understanding what you’re actually buying still requires a little more homework.
