For young investors, social media rules.
In fact, it is the most popular way they are researching investment ideas, according to a new CNBC/Momentive Invest in You survey.
Thirty-five percent of 18-to-34-year-olds said they use social media to look into possible investments, while 25% cited conversations with family and friends, and 24% said financial guidance or investment websites.
Only 7% said they gather research through direct discussions with a broker or financial advisor.
However, financial experts warn that if you are going to get advice from TikTok, Instagram or another platform, do additional homework.
Professionals can be vetted through background checks, but it is harder to discern the motivation of someone making stock recommendations online.
"On social media, everybody can jump in, regardless of who they are, what their background is, what their experiences are," Winnie Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners.
Here's how to navigate the slew of recommendations.
Find financial experts
Financial advisors are trained on money matters, and many have a social media presence. According to a 2020 survey by Putnam Investments, 36% of advisor respondents had hosted or participated in a LinkedIn Live session, for instance.
Vet those you follow. Brokers and brokerage firms can be looked up on the Financial Industry Regulatory Authority website and investment advisors can be checked out on the Securities and Exchange Commission site.
To verify a certified financial planner's background, go to the CFP Board's website. For other professional designations, go to the FINRA page that lists them, along with links to the designation organizations. That may lead you to a way to check out an individual.
Tread carefully
Sun is one of those who has embraced social media. She does a live stream every day on several platforms, including LinkedIn, Facebook and Twitter.
While she gives out financial advice, Sun doesn't recommend specific investments. Those should be customized for the individual, she said.
"If you're gathering your investment advice on social media, there's a good chance that person isn't regulated, isn't licensed," said Sun, a member of the CNBC Financial Advisor Council. "It could just be someone out there sharing an opinion, but you have to take that with a grain of salt."
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And just because an influencer has more than 500,000 followers doesn't mean they have the training or credentials to give financial advice.
"A lot of influencers use their personal experience and stories to base their advice on, but that doesn't mean their situation is exactly the same as their followers'," said Caishalynne Echols, a CFP with Austin, Texas-based Gen Y Planning.
"Trained financial professionals have studied the legislation around taxes, retirement planning, etc., and are equipped to guide people in a million different scenarios," Echols said.
Go a step further
There's nothing wrong with getting excited about an investment or financial tip you are hearing about on social media. The key is to supplement it with your own research.
"You should consult established, reputable and trusted resources before making any financial decisions," TIAA Bank chief information officer John Elton said.
It also helps to consult a financial professional about your ideas. If you don't have one and want a do-it-yourself approach to your investing, it still wouldn't hurt to have a free consultation with one for a second opinion, Sun added.
Use 'play' money
If you decide to start investing on your own after getting social media advice and then researching it, do it with money you are willing to lose, Sun said.
"Separate your serious investing from your play money," she said. "Your serious money is money that you really want to be there for you for those important goals that you have."
In the end, it can be a learning experience.
"Doing [it] yourself doesn't necessarily mean that that's a negative," said Sun, who picked and tracked her own mutual funds when she started investing.
"You also learn what you don't know and what you don't like, as well as what you really like and what you do know," she added. "So I think it's a good thing."
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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.
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