After years of no one in my household taking an interest in how I make a living, my 12-year-old caught me off-guard recently with a barrage of questions about investing.
“What do you know about Elon Musk?” “How much money do I need to invest?” “How long will it take me to be a millionaire/billionaire if I start with $500? What about $1,000?”
I briefly wondered how a kid in Madrid had even heard of the electric-car maker Tesla’s chief executive, who has made some faithful investors very wealthy. But while we should have been playing board games and learning stuff during 2020, the COVID-19 pandemic meant my family was online a lot, especially during a claustrophobic seven-week lockdown in our apartment.
Enter video-sharing app TikTok, whose popularity has soared amid demand from its largely youthful audience for quick-paced and readily accessible entertainment, with 689,174,209 global monthly active users as of July (up from 54 million in January 2018).
My kid took interest in Musk and his billions after viewing an early January post from the account @ac2alityespanol — all the news you need in a minute. With simple language and colorful presentations, a team of young presenters are piquing his interest on lots of topics. That’s a good thing.
But when it comes to investing, the sheer number of TikTok videos on offer — 2 billion global downloads as of August 2020 — means any budding Warren Buffett risks becoming overwhelmed rather than well-informed.
While the app’s algorithm wastes no time in figuring out your search desires, there exist a ton of potential hashtags, with #investing at the top with 1.6 billion views, along with #investingforbeginners with 43 million. Of late, there is a crop of new hashtags and content following the retail frenzy for videogame retailer GameStop — that name was searched over 600 million times on Thursday alone.
The “laughs only” Twitter handle @TikTokInvestors offers up a mix of the sometimes savvy and often outrageous TikTok posts.
Danny Tran, the 21-year-old behind the account @someasianontiktok, has over 480,000 followers (@deepvoicedanny on Twitter). While his followers lob lots of questions at him, Tran tells MarketWatch in emailed comments that he’s “fairly new and just showing what I do myself.”
“My intentions of posting my TikToks with Robinhood was to let the people decide what my money would go in, so I took some of their ideas and just played with that, [and] the recent TikToks are to add to the narrative of what WSBs [participants in the Reddit forum WallStreetBets] started,” says Tran.
He says TikTok helped him catch an early wave of gains for special-purpose acquisition company Churchill Capital which has been the subject of speculation that it could acquire an electric-vehicle company.
Tran points to @trading101 as one useful account.
As for other viable TikTokers for young investors, @calltoleap has California-based former math teacher Steve Chen at the helm and over 600,000 followers. Joining the FIRE — which stands for “financial independence, retire early” — movement at 33, he opened his TikTok account last year.
Tapping into teaching skills, his videos focus on investing for the long term, such as lessons on compound growth, and he regularly answers follower questions. Lately, Chen’s videos have also addressed the WallStreetBets volatility, such as the when-to-sell question.
Advice can also be found on his Instagram account.
Chen tells MarketWatch that he learned to invest with the help of Google searches and YouTube. TikTok, he says, offers plenty of content created by savvy investors with investment tools and strategies for market timing.
“What worries me is sometimes when the younger generation watches this they might think, ‘Oh, yeah, maybe I can do this, too,’ and maybe they’re kind of misinformed and they jump on it and they lose money,” Chen says.
“It’s hard to find accounts with the smartest advice — some would look at follower count, but even that’s not a good metric. It comes down to recommendations and feedback at the end of the day,” Hankwitz tells MarketWatch in emailed comments.
Encouragingly, Hankwitz says he has seen many young people develop an interest in investing during the pandemic and stick with it. “I made a video talking through how to open a Roth IRA [an individual retirement account in which after-tax funds are invested] with Betterment, a reputable robo adviser, and after going viral, they’ve acquired tens of thousands of new users who funded their accounts and still use the product today,” he says.
As for the recent retail frenzy, Hankwitz says that “TikTok does a lot already to combat misinformation and ‘scams’ but this one was going to be hard to keep straight.”
Investor and entrepreneur Humphrey Yang, under the screen name @humphreytalks (his Twitter handle is the same), does have a huge following — 1.5 million. Among his popular posts are one explaining a call option to a fifth-grader and another that sprinkles some cold water on after-hours trading.
“Younger people need to focus on going through that TikToker’s content and making sure they are aligned with them. It is good to not take anything at face value and do your own research especially when it comes to investments,” Yang tells MarketWatch in emailed comments.
The pandemic, he says, has “accelerated the amount of people that stay on the platform to learn and invest. I can see and hear it everyday from the followers, [that] they are very engaged [and] into learning how to better their financial future.” He suggests accounts such as @admani_explains, @logicalfinance, @mainstreetwolf and Austin Hankwitz’s.
As for the GameStop saga, Yang says he’s seen lots of younger investors “just getting on a hype train,” when they should really be “sticking to longer-term investing, since time is on their side.”