What financial products should you buy to generate the highest possible returns? Which start-up will be the new star of the stock exchange? Which of the crypto assets will see a huge price increase? What precious metals should be in every portfolio? Various social media platforms – YouTube, Facebook, Twitter, Instagram, Telegram, Reddit, TikTok, Pinterest – offer consumers points of contact for financial issues and fast answers to the questions above. These social networks are certainly a good place to find helpful information on investments and advice with a trustworthy background. But they are also home to endless misrepresentations; some of the statements made are only partly accurate. Consequently, the investment tips to be found there are often not very reliable. Not all the “experts” giving tips have the knowledge necessary to be able to advise others on financial issues. What is more, in some cases their motives are dishonest. Anybody who blindly acts on such tips thus runs the risk of capital loss – to the point of losing all the money they have invested.

If you wish to invest your money based on the advice and products you find on social networks, be extremely vigilant and follow the recommendations below:

Find out who you are dealing with!

On social media, you will find real experts – but many self-proclaimed experts as well. Both types are also to be found among the financial influencers (known as “finfluencers"), who regularly and frequently post information and investment advice.

The people providing reliable social media content on investment issues normally also explain who they are and where they obtained their expert knowledge. If they are reliable, in many cases you can verify the information they provide by checking other sources. If the identity of the author of a post is ambiguous to any extent and you also cannot tell what sort of (professional) background the author has, you should definitely not rely on the information provided.

Do not be deceived by (seemingly) high approval ratings!

Many followers, many likes and many positive comments do not constitute a quality label. They say little, if anything at all, about the integrity or quality of an online presence. It is easy to manipulate these figures. Any seemingly positive comments or references to successful investments could have been made up and posted at the author’s request. Such content is generally not verifiable.

Ensure you have a comprehensive view of the investment being promoted!

All investments offer opportunities and are also associated with risks. You have to weigh both of them up against each other and assess them in light of your own specific investment objectives. It is often rather difficult to discern whether the opportunities and risks presented in a post are complete and accurate. This is why BaFin advises always checking several sources to ensure you have a comprehensive view of the investment being promoted. Your research should also include independent sources, such as the consumer associations. You should be extremely sceptical if the social media content only or predominantly addresses the investment’s chances of success and leaves out the risks.

Don’t let anybody hurry you!

Investment tips often take an aggressive tone, making you feel that you must react quickly. The aim is to take advantage of investors’ fears of missing an opportunity for profit (fear of missing out – FOMO) and push them to make a rash investment decision. Don’t let anyone push you. Review the investment tip in each case so carefully that you can be sure that you have – and understand – all the information you need about the opportunities and risks.

Question the financial motives of the person offering the tips!

The investment tips you find on social media are usually free of charge. This means that people such as finfluencers make their money in other ways. They normally receive a commission from the company whose investment products they present on their channel. You trigger such commission payments yourself when you click on particular text and picture boxes and are immediately directed to other websites. The problem is that it is often difficult for you, the user, to know what is happening. So please keep in mind that these kinds of remuneration models may serve as a strong motivating factor for the influencer.

Be especially sceptical when the returns promised are very high!

There is no such thing as safe, fast money. Are you being promised exceptional returns? Then you can be sure that the risk is also exceptionally high. Tips like these usually refer to highly speculative investment products that can cause you to lose a great deal – or even all – of your money. The force at work is often even fraud. Social media make it easy to disseminate false information, and this also attracts criminals.

Be wary when you are asked to switch to private messenger services to receive investment tips!

It is important to be especially sceptical when you are in a public forum and are asked to switch to private messenger services for investment tips. If you do so, it will involve disclosing your private contact details. After that you will probably receive a number of unsolicited, unauthorised phone calls offering you investment products and, in many cases, also putting you under a great deal of pressure to act.

Find out about scams prevalent on social media!

To make sure you do not fall victim to criminal activities, you need to know a number of typical scams: by promoting investment tips or reaching out to users on social media, criminals attempt to lure investors into their traps, which can take the form of shady, unlicensed online platforms.

It is not always about investments from the outset. Investors are often contacted by a request in a chat box or on a dating platform or sent a friend request and then later directed towards a shady online platform. There, technology tricks are often utilised to fool them into believing that any money they pay in will be invested and return a profit. In reality, however, there can be no returns: the amounts transferred are not channelled into a capital investment. This frequently applies to investments in crypto assets such as bitcoin or ether, but also transactions in contracts for difference (CFDs).

If you fall victim to such fraud, it will be very difficult to identify the people responsible – they often steal an identity and hide behind it. Fraudsters, who are frequently based in countries outside the European Union, often fake the authorisation of a supervisory authority on their platform. Sometimes these authorities actually exist; sometimes they are made up. It is even often the case that fraudsters pretend to be connected to companies with well-known brand names, or they claim that their platform works for public sector entities such as government ministries or the police.

What you can hardly recognise beforehand: price manipulation!

Again and again, the prices of financial instruments such as shares are influenced by dishonest players on social media. Giving false or misleading investment tips, they try to generate or increase the demand for shares, concealing the fact that they have these investment products themselves and thus personally stand to benefit greatly from price gains. They propagate these dubious investment tips with the intention of selling off their investment at a profit once they have successfully brought about a price increase. As a result, the price usually drops again, and all the other investors lose money.

What can you do if you have fallen victim to criminal activities on social media?

If you are the victim of a criminal offence on social media, you should report the matter to the police or the public prosecutor’s office immediately. If in doubt, you can also contact BaFin itself. You can reach the consumer helpline free of charge at 0800 2 100 500.