If you have any preconceived ideas about trading on the stock market, they’re either pretty old-fashioned (suited-up men holding bulky phones in big offices in the 80s and 90s) or based on dodgy social media accounts persuading you to give all your money to a guy who flies on private jets every week.
Much is being done to make the world of investments accessible to you and I, with much of this drive focused on investment management, mixed funds and robo-investing, all of which can be done with just a basic knowledge and without having to learn about trading individual stocks.
But individual trading is growing in popularity, especially thanks to the ‘StockTok’ phenomenon (with the #stocktok generating 3.3 billion views on TikTok) that sees people share (entirely unregulated) trading tips on social media ie. the difference between a Roth IRA and a 401(k), and encouraging young people to start investing for retirement.
TikTok content
This content can also be viewed on the site it originates from.
At its worst, however, Finance TikTok perpetuates financial myths, scams, and dangerously misleading information. After all, this is an app that has the ability to take an average person’s video and show it to millions of others within a matter of hours.
New research by financial brokerage XTB looks at some possible risks of different StockTok trends. Worryingly, the research finds that, “some TikTok hacks with over 500,000 views are promoting extremely risky investment strategies that could leave investors broke.”
Young people were also found to be more likely to fall victim to investment scams, according to data published by Barclays in July 2023. The bank’s data revealed that 26% of investment scam victims were under the age of 30 – and the average amount lost by young people was “equivalent to a year’s student loan”.
Ross Martin, Barclays’ head of digital safety, said: “Young people earning income early in their careers may want to invest their money, and social media can offer many helpful tips and tricks on how to manage your money. However, it’s important to remember that not everyone offering an investment opportunity is genuine, and they could actually be a scammer.”
Below, you’ll find a guide to what it means to trade, the platforms making it possible, and what to be aware of:
How is trading different to investing?
Investing and trading are both, essentially, ways to use the stock market to make a profit – but they are very different in method, risk and intensity, and one mustn’t be confused with the other. The key difference, really is timescale, which impacts on the risk to your money. Investment is a long-term strategy, usually employed over a minimum period of three to five years, and is used to grow your money over time, for long-term goals such as retirement, upsizing your home, or saving for your children’s future.
You can invest using a few different products across a huge number of platforms, including investment apps and traditional investment companies. You can access investment products either directly, or through a financial advisor, who will also give advice on the products that they think will grow your money most efficiently.