Introduction
Since the launch of Jio in 2016, data prices in India have become extremely affordable, leading to a significant increase in internet usage across the country. Prior to 2016, the average Indian used only 0.8 GB of data per month. However, with the advent of cheaper data plans and the widespread availability of smartphones, the average data usage has skyrocketed to over 15 GB per month. It is worth mentioning that a significant portion of this data consumption is attributed to video content. During the past few years, the Indian capital market has experienced remarkable growth despite facing various challenges. The market has witnessed periods of volatility, including the COVID-19 crisis, which caused a sharp decline followed by a remarkable recovery. Additionally, there have been periods of relative stability, with the market remaining stagnant for around 1.5 years. However, it is noteworthy that the Indian market is currently trading at an all-time high level.
Throughout this period, numerous finfluencers have emerged in India, garnering immense popularity and amassing millions of subscribers. Their influence has contributed to shaping the investment decisions and perspectives of a vast audience across the country.
Impact of Finfluencers on Investors
Finfluencers play a significant role in shaping the investment decisions of retail investors and young individuals. Through their articles and content, influencers cover various financial topics such as the stock market, mutual funds, personal finance, insurance, and F&O. Their primary focus is on educating investors about major market events and related subjects. In India, many influencers have made commendable efforts to provide financial education and create awareness about investment products like the stock market, mutual funds, and F&O. As a result, investors have placed their trust in these finfluencers, leading to a surge in SIP investments and the opening of demat accounts.
While some finfluencers genuinely aim to educate and assist investors, there are others who promote and sell products such as insurance policies, demat accounts, subscriptions, and Telegram groups. They often include links to these products in the comments section and video descriptions. Many viewers are enticed to purchase these promoted products, join Telegram groups, and even open demat accounts. However, concern arises when influencers delve into complex topics such as stock analysis or F&O without possessing in-depth knowledge. In their attempt to cover these subjects in brief 10- to 15-minute videos, the information may not be fully comprehensible, and blindly following their advice could potentially lead to financial losses.
Finfluencers’ Paid Promotions: Is It a Good Practice?
It is acceptable for finfluencers to promote products, courses, or other offerings as long as they transparently clarify that it is an advertisement. However, considering the large following of influencers, it is crucial for them to ensure that they are not solely promoting products for monetary gain. Investors who trust and follow influencers can be directly influenced by these promotions, which can have a direct impact on their investment decisions. Some finfluencers also encourage viewers to join Telegram groups where they provide stock tips, F&O tips, or promote insurance policies that may not be suitable for everyone’s financial situation. As a result, investors may incur financial losses due to these advertisements.
On the other hand, many finfluencers also promote beneficial products that genuinely help investors. These may include books, audiobook apps, demat account links, courses, and other resources that assist individuals in making informed financial decisions.
How Should Investors Pursue Finfluencers’ Content?
When it comes to engaging with influencers, investors should approach their content as a source of knowledge and information rather than relying on them for financial advice. For instance, if an influencer explains how to select the best mutual fund by considering various parameters, it is advisable to watch and understand their perspective. However, blind trust in their recommendations and investing in the specific mutual funds they suggest may not be the most prudent approach. This principle applies not only to mutual funds but also to any other financial products discussed by influencers.
In the realm of social media, numerous videos cover topics such as the stock market, mutual funds, F&O, commodities, and more. However, it is crucial to understand that not all of these products may be suitable for your unique financial situation. Ultimately, it is your investment and your money, which means the potential profit or loss directly impacts you, not others. Over time, as you follow finfluencers, you will gain a better understanding of whether their content is genuinely helpful for your financial decision-making.
Moreover, if you find it challenging to manage your finances independently, it is advisable to seek the assistance of a dedicated professional advisor. A financial advisor can provide guidance on designing your investment portfolio and managing your personal finances effectively.
In conclusion, investors should utilize finfluencers’ content for knowledge and information purposes while being cautious about blindly following their advice. It is crucial to make investment decisions that align with your financial goals and risk tolerance. Additionally, if needed, consulting a professional financial advisor can provide valuable assistance in creating a sound investment strategy.
Stay safe, stay healthy, and stay invested.
Sarthak Patel is a dedicated and accomplished wealth manager at UpperCrust. With a strong foundation in financial expertise and a passion for helping individuals achieve their financial goals, Sarthak has also cleared the NISM Investment Advisor Level 1 and Level 2 exams.
