Do you have a DIY approach to investing? Consider these risks first

Financial literacy and investing have been garnering an increasing share of India’s digital public discourse, according to the ‘Twitter Trends 2022’ report. Discussions around financial literacy were up by a massive 185% within a year, the report said.

At the same time, conversations around finance grew by 62% on the social media platform, as Indians turned to each other for questions about money.

A lot of these conversations that involved topics like market news, learning to trade and investments, were being led by financial influencers or ‘finfluencers’. This trend was not restricted to just Twitter, influencers have been dishing out advice to a keen and growing audience across platforms like YouTube, Instagram and Facebook.

The dark side of finfluencing

These reports failed to mention another set of keen eyes that were following these trends as they gained momentum - the Securities and Exchange Board of India (Sebi). One case of particular interest was the instance of crypto trading platform Vauld suspending operations, including withdrawals and deposits, leaving investors in a lurch.

Certain influencers who had gained a substantial following had promoted Vauld with misleading terms like ‘fixed deposits’, implying the safety of investments in what is known to be a highly volatile market. While there is no law against advocating investments one believes in, gaining from such promotions falls under various legal purviews.

The issue was that these influencers weren’t necessarily promoting these platforms because they believed in the product but were getting paid to do so. This and other instances where fraudsters have manipulated stock prices through social media promotions have prompted Sebi to work on regulations for financial influencers.

DIY personal finance and some common errors

Another underlying trend behind the rise in these conversations on social media was do-it-yourself (DIY) investing and personal finance. With more free time on their hands thanks to the pandemic-induced lockdown, many Indians took their first steps into capital markets with the help of money management apps and online investment platforms.

While traditional routes to investing involved going through brokers and professional advisors, a lot of these first-time investors looked to their peers and social media for advice, resulting in the rise of the finfluencers.

All this goes to show that there is no substitute for doing your own diligent research. But that is not to say one cannot take help when it is offered through the right channels. Managing your own finances and investments can be a daunting task which makes getting the right kind of help all the more important.

Automation - an upgrade to DIY investing

The journey towards DIY investing starts with many crucial steps such as tracking expenditures, budgeting, saving and making informed decisions. But not all of these need to be manual tasks. Online money management platforms like Fi Money offer financial tools that automate these tasks so you can focus more time on what’s important.

The Fi Money app comes with an AI-powered financial assistant that can automatically track and analyse your expenditure to deliver deep insights into your financial behaviour. You can automate your savings with innovative AutoSave rules like, ‘Put aside ₹100 every time I order food on Swiggy’. Never miss an investment opportunity while taking full advantage of rupee-cost averaging with daily AutoInvest rules like, ‘Invest ₹100 in XYZ mutual fund everyday’.

We’ve all heard stories of DIY investing gone wrong, resulting in people losing their hard-earned money on get-rich-quick schemes. But regulated entities like Fi Money offer transparent and trustworthy financial information, making them ideal platforms for safe DIY investing. Furthermore, you can customise the AutoSave and AutoInvest rules based on your own research, helping you achieve your financial goals in a structured and disciplined manner.

Moneycontrol Journalists were not involved in the creation of the article.