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Social Media Growing to be a Trusted Source for Investors

Social media streams can provide investors with a wealth of data.

Investors are constantly looking for the next best thing that can generate a large profit. In the past, investors would rely on companies to provide them with their information, but now social and digital media channels are

Investors are constantly looking for the next best thing that can generate a large profit. In the past, investors would rely on companies to provide them with their information, but now social and digital media channels are becoming a trusted source for leads with content about investment opportunities, according to recent research from global corporate and financial communications consultancy Brunswick Group.

"Usage and engagement of digital and social media among those in the investment community is increasing rapidly," said Rachelle Spero, partner at Brunswick. "More telling, however, is that its influence on investment decisions continues to grow too."

Social Media Making Headway
Data released by firms is still leading the way for investors, with 57 percent of respondents claiming "information direct from companies" as the source with most influence. However, 14 percent of participants included "digital and social media" among their top three most influential sources, an increase of 6 percentage points from the previous year. Data streams such as blogs, messages boards, social streams, websites, video, and syndicated sources are proving to show promise for investors who are looking to good places to put their money. 

"Now, a quarter of those surveyed said they have made an investment decision or recommendation after initially reading a blog," said Spero. "This suggests now is the time for companies to adopt digital and social media for investor-related content distribution and influencer engagement."

Company Information Still Most Valuable
Investment professionals are joining social networking sites, and are finding useful sources for information about investments. But this data is not nearly as reputable as information direct from companies. Investors are still discerning about their data sources, with the survey revealing that 85 percent rank company information among their top three sources of influence. Eighty-five percent of respondents said digital and social media sources have become more important this year, especially among investors in Asia. This is the just the tipping point for the potential social sites and digital sources have in the investment community.

"While investors and analysts are increasingly influenced by digital and social media as the basis for investment decisions, companies and managers should be encouraged that the vast majority look to information direct from companies as the main building blocks of their investment rationales," said Spero.

Gen X and Y Using Social Media the Most
Younger generations of Americans have grown up in the social media age, where before they were able to drive a car they had access to social media sites and the droves of information that come along with them. This is why it's not surprising to learn that the more affluent Gen X and Y investors are logging on to social media channels to help them make personal finance and investing decisions, said a recent study from Cogent Research, reported on by Credit Union Times.

The research showcased three-quarters of affluent investors in the U.S. are using social media sites more than once per month, and 70 percent of all investors have made decisions with their or their company's money based on content found on social platforms. Investors are seeing social media sites as another research channel in the mass amount of information available at the fingertips, the source gathered from the survey. As Gen X and Y grow in age, more investors in that age group are considered affluent, demonstrating how social media sites can be a vital tool in money management decisions.

Are your using social media to shape investment decisions? If so, how often are you searching these information streams for useful data?

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