When Tom Robertson invested his first £10, he had a stab at day trading stocks. Within a few months, he realised it wasn’t for him.
‘I learned pretty soon that the ‘get rich quick’ stuff you see on social media isn’t what you should be listening to if you want to invest successfully and actually make money,’ the 27-year old investment analyst from Cardiff says.
At the time, Tom was a student running odd jobs and bringing in a few quid here and there.
‘I was at uni and like most students, money was always an issue. I worked a bit doing online lead generation for a company and on and off as a brand ambassador for Amazon.’
‘It wasn’t reliable income but I was really conscious of the fact I wanted to be saving for the future and having a go at investing made sense at the time.’
After seeing a few ‘finfluencers’ (financial influencers) posting about how ‘easy’ day trading was, Tom’s first attempt wasn’t quite as successful as he’d imagined it might be.
‘I’d always been interested in financial freedom but at that point, I realised I need to shift my mindset. That’s when I started learning about passive investing.’
In 2017 Tom opened a stocks and shares Isa, which allowed him to invest and not pay tax on any income or returns he might make.
‘I had heard about an app called Plum and it appealed to me because after I’d set it up, it did the saving and investing for me.
‘It connects to my bank account and uses an algorithm to work out what I can afford to save each week, then automatically transfers it to my Isa and invests it into the funds I’ve chosen.’
Those first few months, Tom was investing between £10 and £20 a week.
‘I barely even noticed it was going out of my account – I didn’t have to think about it and it meant I was actually saving something finally.’
As his money grew, Tom started to get into doing his own research into where to invest it.
‘I liked the idea of diversifying – spreading my money over a few different sectors and quite a wide range of funds. It minimises the chance of me losing a lot of money, even if something does go wrong for one fund the others are usually okay.’
He opted to invest in an ESG fund that focuses on companies that make a positive contribution to the environment or society. He’s also got money in an emerging markets fund, a UK equities fund and a technology fund.
‘It’s been really interesting watching how different sectors have done since I started investing eight years ago. The global tech fund I’m in has done amazingly well – it’s gone up 150% over that time. I bought in when it cost 89p per unit and now a unit is priced at £2.25.’
While not all the funds he’s chosen have delivered such a stellar return, he has reinvested the income he gets from dividend payments, when companies share some of their profit with their shareholders.
‘That’s had an incredible impact on how quickly the money I’ve saved has grown. I was saving a tenner a week when I started, now I’m working and on a decent salary, I’m putting around £150 in a week. But with the extra income from the investments themselves, I’ve now got just over £30,000 in my Isa.’
If there was one thing he’d say to anyone new to investing and thinking about starting?
‘There are two sides to investing, yes, it’s a risk because you might see the value fall. But it’s also a much better way to grow your savings over the long-term.’
Risks of the rise of the finfluencers
Brand ambassadors, TikToks featuring the best new make-up, interior design on Pinterest, Snapchat, Instagram, YouTube, X and Facebook.
We’re used to seeing video clips of bright young things influencing social media users to buy this or buy that.
Increasingly, social media is being used by so-called ‘finfluencers’. Some are there to share valuable personal finance and money management tips.
But there are also those who sell their own wares – investing courses costing £1,000s, how to get rich investing in property, how to trade FX and become a millionaire in months.
The latter are not always what they seem – indeed, they are dangerous.
So dangerous that financial regulators from Australia, Canada, Hong Kong, Italy, the United Arab Emirates and the UK teamed up this summer to warn social media users against falling for “illegal financial promotions by rogue finfluencers”.
More and more people are losing serious sums of money – whether it’s through misguided investment into cryptocurrencies, penny stocks or actual scams.
Research from Barclays suggests that one in four UK adults on social media feels under pressure to act quickly on unsolicited advice from finfluencers.
Two out of five who’ve acted on social media investment content have lost money as a result.
Criminals have cottoned on in droves. The latest fraud report from banking trade body UK Finance showed investment scam losses increased by 55% in January to June 2024 to £97.7million.
Clare Francis, director of savings and investments at Barclays Smart Investor, said: ‘There are many great finfluencers who provide good, sensible guidance, which could help improve people’s financial situations. However, this is not always the case.
‘To protect yourself, do your own research before parting with any money and make sure it’s right for your circumstances and goals.’
It’s also a good idea to use the Financial Conduct Authority’s ScamSmart Investment Checker to make sure the firm promoting the investment isn’t on their warning list.