The Costly Lesson from Social Media Finfluencers
Tom Robertson, a 27-year-old investment analyst from Cardiff, learned about the perils of day trading the hard way. His initial foray into the markets began with just £10, spurred on by social media 'finfluencers' who promised easy wealth. He quickly discovered that the 'get rich quick' rhetoric was a dangerous illusion.
As a university student juggling odd jobs, from online lead generation to working as a brand ambassador for Amazon, Tom was acutely aware of his financial future. His unreliable income made him conscious of the need to save, but his first attempt at investing, inspired by finfluencers, was far from the success he had imagined.
The Shift to Passive Investing and Steady Growth
This early failure prompted a crucial mindset shift. In 2017, Tom abandoned the stressful world of day trading and opened a stocks and shares Isa. This tax-efficient wrapper became the foundation of his new strategy. He started using the Plum app, which connected to his bank account and used an algorithm to automatically transfer what he could afford to save each week—initially between £10 and £20—into his Isa.
As his savings grew unnoticed, Tom began conducting his own research. He embraced diversification, spreading his investments across various sectors to minimise risk. His portfolio now includes an ESG fund focusing on positive social and environmental impact, an emerging markets fund, a UK equities fund, and a global technology fund.
This long-term approach has paid off handsomely. His global tech fund has soared by 150% since he started investing eight years ago, with the unit price rising from 89p to £2.25. By reinvesting his dividends and increasing his weekly contributions to around £150 now that he has a stable salary, Tom has built an impressive Isa pot of just over £30,000.
The Rising Threat of Rogue Finfluencers
Tom's story highlights a growing concern. The rise of 'finfluencers' on platforms like TikTok, Instagram, and YouTube has led to a surge in risky behaviour and outright scams. These influencers often promote expensive courses, property schemes, and forex trading with promises of instant millionaire status.
The danger is so pronounced that financial regulators from the UK, Australia, Canada, and other nations issued a joint warning this summer against illegal financial promotions by rogue finfluencers. The consequences are severe. Barclays research indicates that two out of five people who act on social media investment content lose money.
According to UK Finance, investment scam losses surged by 55% in the first half of 2024 to £97.7 million. Clare Francis, director of savings and investments at Barclays Smart Investor, advises, "To protect yourself, do your own research before parting with any money and make sure it’s right for your circumstances and goals." Using the Financial Conduct Authority's ScamSmart Investment Checker is a recommended step to verify the legitimacy of any investment opportunity.
Tom's final advice for new investors reflects his journey: "There are two sides to investing, yes, it’s a risk because you might see the value fall. But it’s also a much better way to grow your savings over the long-term."
