The way Canadians make investment decisions is changing – and social media is playing a bigger role than ever, particularly with self-directed or do-it-yourself (DIY) investors.
Self-directed investors buy and sell some or all of their investments themselves through an online platform or app, without involvement from an investment professional. Advised investors receive more guidance. They work with investment advisors at a bank or firm, or use a robo-advisor, to manage their portfolios.
Most Canadians still turn to investment advisors and financial institutions for investment advice, but about 1 in 3 look to social media and other online sources. Research from the BCSC shows just how significant this trend has become, particularly for self-directed investors: 43% of Canadian investors have some self-directed investments, and almost 40% of self-directed investors say they use social media platforms such as YouTube, Reddit, and TikTok for information and advice. Younger investors in particular are driving this trend.
Here’s what the research found:
Social media is one of the top sources Canadians use for financial advice.
- Most Canadians (67%) turn to investment advisors and institutions for financial information. 45% turn to peer sources like family and friends, and 36% turn to online sources, including social media.
- YouTube is the most popular social media platform among Canadians, with 10% of them using it for financial information. TikTok leads the way for those aged 18-24, with 20% turning to it to help make decisions about money.
- Investors under the age of 45 are especially likely to rely on online discussion boards and influencers for financial information.
- Self-directed investors are about three times as likely as other investors to go online for tips: close to 40% of self-directed investors, compared to 13% of other investors, including those who only work with an advisor.
- Many self-directed investors are turning to sources like online discussion boards and social media, and searching within trading platforms for investment opportunities. Most (60%) say they don’t rely on influencers for this information.
Self-directed investors generally trust the advice they find on social media – but they’re still cautious.
- Self-directed investors prefer doing business online and have higher digital skills.
- They don’t treat all information on social media equally or with complete trust. Posts with more context like pros and cons, multiple sources, or lots of engagement make it feel more reliable.
- Most self-directed investors find social media content less trustworthy if the content is sponsored, or if it includes a lot of memes or slang.
- Trust in social media advice drops with age and rises with risk tolerance.
Young men in particular are buying investments they discover online.
- Ten percent of all Canadians bought an investment they first saw on social media in the past year. For young men, that number jumps to 25%.
- About 1 in 3 self-directed investors have bought investments they discovered online.
- About a quarter of them have bought investments they first spotted on social media platforms like Reddit, TikTok, or YouTube.
- Young men between 18-34 are more likely than average to purchase investments they heard about online generally, and on social media specifically.
If you already manage your own investment portfolio, take our Self-directed Investing Quiz to find out what your investing habits say about you.
Where Can You Find Reliable Information about Investing?
Social media can feel like an easy starting point, but it’s not always trustworthy. Be skeptical – always check the source and its claims. Take the time to do your own research or consider consulting an investment professional before making any investment.
A great place to start is SEDAR+. This is a free resource where you can look up Canadian companies and read public filings including prospectuses (an important document with information about the company that can help you make an informed decision as an investor), financial reports, and other continuous disclosure documents. You can also find cease-trade orders and disciplinary information against companies or individuals.
Other unbiased investor education resources include tools from the Canadian Securities Administrators, Ombudsman for Banking Services and Investments, and the Canadian Investment Regulatory Organization.
Learn More about Self-directed Investing
BCSC research shows self-directed investing is growing in Canada. People like it for convenience, control, and lower costs.
Thinking about giving it a try? Check out Ways To Manage Your Money to learn more.
Report a Concern
If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Contact Centre at 604-899-6854 or 1-800-373-6393, or through email at [email protected]. You can also file a complaint or submit a tip using the BCSC’s online complaint form.
InvestRight.org is the BC Securities Commission’s investor education website. Subscribe to receive email updates from BCSC InvestRight.
