Do online communities add value to your investment decisions?

If you want suitable investment ideas, talk to a financial adviser. This sage advice, however, leaves many questions unanswered. How to find good advisers? Will they have all the answers you need? Can you afford an advisor?

Investors have often turned to online communities for answers to these and other questions. In this article, we examine whether some of these established and emerging online communities add value to your investment decisions.

“Dedicated investment communities are the next step in the evolution of social media around investing. Social media such as Twitter, Facebook or Instagram are generic – used to discuss all sorts of topics without feeds specifically designed for investing,” said Mihir Patki, co-founder of Multipie, one of the new online communities. “The second problem is that fake profiles, screenshots, and random gyan (wisdom) without context. this issue by keeping the wallets authentic through integrations with partner brokers,” he added. Essentially, users’ holdings will come from their brokers with their consent rather than self-declaration.

“Privacy for all users is maintained – we don’t show absolute numbers, only asset allocation and top holdings are shown, just as you would discuss your portfolio with friends in real life,” said Patki. “Launched in October 2021, our user base of over 100,000 is purely organic The quality of engagement on Multipie and the average wallet size of 50 lakh are far better metrics than mere numbers of millions of inorganically acquired users who cannot contribute to the community. We’re not looking for user growth for fun,” Patki added.

Then there’s Valuepickr, a stock discussion forum that was launched in 2010. The forum contains stock threads that go back years, allowing readers to see how the discourse around a stock has evolved. Since the platform is free, it avoids the bells and whistles that for-profit companies use to keep users engaged. It focuses on fundamental analysis of stocks, typically in the small cap space that larger institutions haven’t discovered. It also has a community that actively moderates content. “Any short-term day trading goal or behavior is discouraged by the community,” said Donald Francis, its co-founder. “In addition, Valuepickr has a section where only “collaborators” can post. have been verified by the founders of the platform. Depending on the quality and frequency of posts, we admit 3-4 new collaborators each year and roughly the same number is removed,” he added.

Finance has traditionally been dominated by men, but there are also female-only communities. Priti Rathi Gupta created LXME, one such community in 2019 as a Facebook group. “It was a closed group and our idea was to develop a safe space where women could talk about investments. Women didn’t know where to have money conversations. No one was talking about it at home or with friends, and the counselors are usually men so there was a disconnect. The group now has 30,000 women and 60% of them engage in it on a daily basis,” she said.

LXME also has an app with around 40,000 users, according to Rathi Gupta. The platform focuses on financial education and then empowers women to invest through it (LXME is a mutual fund distributor, a separate entity from Anand Rathi which itself is a large fund distributor mutual funds).

According to Rathi Gupta, the community element is important, especially for women, especially those who are not wealthy people. For these women, counseling is not readily available. “If we find people posting things that are not appropriate, for example promoting an unknown cryptocurrency, we comment on it stating our point of view. This is how we moderate the platform, but we We are not deleting any posts. Many female Consultants are part of LXME. However, we do not allow direct customer solicitation,” Rathi Gupta said.

Even though investment-oriented communities have grown, it’s important to ask how each of these groups makes their money. Multipie, for example, offers products such as NCDs and corporate FDs to users and earns commissions from them. It will soon start charging brokers for integrating the platform into their websites. LXME is currently free, but users who invest through its app must pay commissions (it is a mutual fund distributor). Valuepickr is free and that explains its streamlined interface, but you should be wary of community members who simply post to solicit customers.

In the past, online investment forums were in the limelight for the wrong reasons. Examples abound of scammers using them for pump and dump schemes. The surge in meme stocks such as Gamestop and AMC in the US triggered by discussions on Reddit underscores this. However, the right type of forum, used in the right way, can provide you with good information. These should at best supplement your own research, if you are a self-directed investor, or supplement advice given by a qualified professional.

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