Information from peer groups & social media cannot guide financial planning

A recent survey report – the Investor Survey 2025 from the Securities and Exchange Board of India (Sebi), in collaboration with the Association of Mutual Funds in India (AMFI) and key market infrastructure institutions such as NSE, BSE, NSDL, and CDSL, provides interesting insights about Indian households and their participation in the securities market. Despite all the noise around equities, only 9.5% of Indian households participate in the markets.  Even among those who invest, only 36% possess a high or moderate level of knowledge about securities markets. 

For information and education, personal contacts, social media, fininfluencers, online investment communities on WhatsApp, Telegram groups, TV  are  the most popular sources.  About 93%  investors find fininfluencers to be moderate to highly credible and among them 62% investors make their investment decisions based on fininfluencer recommendations. Only 25% of investors actually consult with financial professionals. 

This is an area of concern. Limited knowledge, combined with the expectation of high returns, quick gains, and the assumption of low risk can be a dangerous mix for investors. 

Personal finance is exactly that — personal. Everyone’s goals, income, and priorities are different, so financial decisions need to be customised rather than copied from others. Often, people end up following their peer group and get into investments like unlisted stocks/ fractional property etc- investments whose working and risk they may not truly understand. Many times, the investments made do not tie in with any of the person’s goals as well. 

Anyone can post financial opinions online. But do these recommendations even hold good? For example, there are many videos telling people what asset allocation they should follow at different ages. Now blindly applying this to one’s portfolio can be detrimental as one may not have the time frame required to stay invested for the risk being taken. If a person has goals in 3 years and ends up investing in equities based on the videos, it can certainly carry risk to capital. 

Social media reels are generic and essentially tips which may help for small matters but are not applicable for long term finances. Videos on how to maximise credit card points are useful to an extent and take away focus from the more important aspects like financial planning. The multitude of investment hack videos only end up making investors take impulsive decisions. 

There is also no accountability for losses. A lot of social media content is based on what is trending and again this may not be suitable for the investor.  With the recent rise in gold and silver prices, there has been a surge in content urging people to invest quickly in these metals and investors run the risk of being overexposed to commodities.  

The pursuit of quick gratification - information and returns, is leading investors to compromise on risk management and keeping the focus on the short-term gains over long-term financial planning. It is time to get back to the basics – proper research and planning, time-tested principles that lead to sustainable, long-term wealth.