We are living in a new era of investing. Meme stocks, cryptocurrencies, NFTs, SPACs and even ETFs have over the past few months attracted tens of millions of new traders, drawn in with a mix of stimulus money, easy brokerage apps and pandemic-era boredom, Bloomberg reported. Those traders are passionate, sometimes very young, often belong to devoted online communities and in some cases have been very financially fortunate. That doesn’t mean they’re financially literate. Experts have warned since the beginning of the latest retail mania that many new entrants are conflating investing with speculating. The difference can at times feel hazy, particularly at a moment when perspectives are shifting. Take Bitcoin. Just a few years ago, the head of the largest bank in the U.S. called it a “fraud,” reflecting the views of many on Wall Street. But these days it’s increasingly looking like a mainstream investment. ETFs linked to Bitcoin debuted recently and the token has become so large that Wall Street just can’t ignore it. Still, this doesn’t mean Bitcoin is risk-free, or that the tens of thousands of other coins in the cryptocurrency universe are suitable assets for retail traders. To make sense of all this, investors have been turning to some unexpected sources. TikTok is one. There, and in other corners of social media, “finfluencers” can make hundreds of thousands of dollars peddling financial knowledge to young audiences hungry to learn more. Much of this is educational and even entertaining. Yet the social world is rife with financial scams, and they are becoming more sophisticated than ever. If you are a retail investor — or are thinking of getting into the market soon — having strong financial literacy is crucial. But what that entails is changing rapidly. In a fast-developing developing market, you might now want to know more than simply what Bitcoin is. These days you might instead be left wondering about the difference between buying Bitcoin, a Bitcoin ETF and another coin, such as Solana.
