The Influence of Finfluencers: Navigating the Risks in India’s Booming Market

In today's digital age, India’s influencer marketing industry is experiencing explosive growth. With a CAGR of 18%, the industry is expected to soar to a staggering US$500 million by 2026. This rapid expansion has given rise to over 7,000 "Mega" influencers, each boasting more than a million followers, and 92,000+ "Macro" influencers with over 100,000 followers. While these digital powerhouses shape trends and opinions across various sectors, the rise of Finfluencers—financial influencers—comes with significant risks that can't be ignored.

?The Rise of Finfluencers: A Double-Edged Sword

The COVID-19 pandemic drastically shifted how people think about earning a living, leading many to explore the stock market as a viable means to secure their financial future. Work-from-home arrangements and the rise of accessible trading platforms triggered a surge in retail investors, and with them, the emergence of Finfluencers. These individuals, who share their financial insights and stock market tips on social media, quickly gained large followings.

However, this new breed of influencers, while seemingly knowledgeable, is often driven by the same incentives as other influencers—brand deals and promotional campaigns. Unlike celebrities in the FMCG sector who endorse consumer products, Finfluencers shape financial decisions, often with the primary goal of benefiting their sponsors. The advice they dispense may not always be in the best interest of their followers and can lead to significant financial losses.

Without proper regulation, the risks multiply. Consider the possibility of a Finfluencer, much like the infamous "Roaring Kitty" from the GameStop saga, manipulating stock prices while profiting from zero-commission trading apps. The Indian market isn't immune to such risks, and the potential for a similar scandal is very real.

The Real Estate Reality Check: Why Following Finfluencers Can Be Costly

In recent years, Finfluencers have popularized the notion of renting over buying, with the argument that the money saved on rent could be invested in the stock market for better returns. The assumption was that the stock market would continue to perform well while real estate prices would stagnate. However, reality has painted a starkly different picture.

Over the last two years, real estate prices in India have surged—up 28% on average, with Bangalore and NCR Delhi witnessing staggering increases of 34% and 80% respectively. The post-COVID shift towards spacious, well-equipped homes has fueled demand, far outpacing new developments and causing inventory levels to plummet to their lowest in years.

The surge in demand, coupled with the rapid sales of high-quality properties, has led to a severe shortage of available inventory, driving prices even higher. Families are upgrading from 1BHK to 2BHK units or moving into branded gated communities, which offer a host of amenities. These trends have resulted in a more than 50% increase in real estate sales post-COVID, with branded developers capturing an unprecedented market share.

As the interest rate cycle approaches its peak, any potential cuts in the coming months would enhance real estate affordability, further boosting demand. With pent-up demand, low inventory levels, possible interest rate cuts, and new launches by branded developers, the real estate market is poised for continued growth. Those who followed Finfluencers' advice to delay buying a home may now face much higher costs in the future.

Don’t Follow the Herd—Consult a Professional

John Bogle’s famous cautionary note about following the herd in investments—"you may end up in the slaughterhouse of regret"—is more relevant than ever. The consequences of blindly following Finfluencers could be severe, especially when it comes to a major decision like buying a home. Those who chose to invest in property early have made a wise decision, benefiting from the significant appreciation in real estate values.

Just as you would seek the advice of a family doctor for your health, it’s crucial to consult a Registered Investment Advisor (RIA) before making major financial decisions. While Finfluencers may have a massive following, they may not have your best interests at heart. In a world where market manipulation and hidden conflicts of interest are genuine concerns, professional guidance is not just valuable—it’s essential.

As the Finfluencer phenomenon continues to grow, it's important to stay informed and cautious. The allure of easy financial advice on social media is tempting, but the stakes are too high to rely solely on influencers’ opinions. For long-term financial health, turn to trusted professionals who prioritize your best interests over sponsorship deals. Your financial future is too important to leave in the hands of those who may not have your best interests at heart. Consult your RIA before making major financial decisions.