This year isn’t defined by the all-time highs, the circuit breakers being set off back during the March correction or the narrative that mainstream financial news told — but by the stories we have to share.
Arguably one of the best places to find stories, thoughts and blurbs is on Reddit. Social investing communities like /r/personalfinance and /r/investing are just two of the thousands of communities talking about moves and trends in markets, money and saving. So, we went through some of the top posts on our favourite finreddits to see what conversations are capturing the economy of attention among investors.
1. Who panics about stocks first: Reddit, Twitter or the news?
In August, redditor /u/atc2017 posted to /r/investing to share an algorithm he wrote to see if news sites, Reddit or Twitter panic before the stock market. The analysis offers insight into how people on social media and at news organizations are feeling about specific stocks. This is then compared against the value of the S&P 500 index or Volatility Index (VIX).
In the run up to the March COVID-19 correction, news stories were overwhelmingly negative compared to social media posters. Yet another takeaway is that redditors are not as temperamental as news or Twitter posters, often staying below the sentiments shared in news and Twitter.
However, there is something positive to take away from this data set. People’s feelings about stocks have been looking up, much like the value of the S&P 500. In fact, they’ve returned to pre-COVID levels. We highly recommend checking it out.
Word to the wise: Social tools might be a Wild West in the financial sector, but they also might be ones which can predict seismic movement on markets.
2. Spending-conscious redditor tracks expenses for their dog over the course of a year
After tracking their German Shepherd’s expenses, /u/HammyFresh shared that their pet cost $2,401 a year (or $200 a month) on /r/personalfinance. These expenses included everything from food, treats, vet visits, meds, toys, boarding, insurance and other costs and liabilities of having a furry friend (and in their case, a chewed air conditioner cord).
Other commenters chimed in with their own ‘cost analysis.’ /u/billswinthesuperbowl added that their pup cost almost $5,000, but not for the reasons you think (healthcare costs a lot for pets too as it turns out). Another redditor, /u/pkzilla, posted a separate analysis sharing the thousands of dollars spent on their cat’s broken leg. /u/pkzilla offered a poignant point to all prospective pet adopters: “be prepared.”
Word to the wise: There are costs and benefits to everything. Family is no different. Keeping track of costs for every small thing makes a big difference!
3. One redditor realizes their employer is stealing withheld wages and quits
Millions of Americans have taxes withheld from their paychecks to cover Social Security and Medicaid. They trust that the money is going to be sent to the IRS. However, it turns out that one redditor’s employer lied that the wages were withheld and pocketed both parts of the owed tax for themselves.
/u/st0rm0ntheh0riz0n said that their w-2 tax forms claimed he should have withheld taxes sent to the IRS on his behalf. But in this case, after signing into the Social Security website, he saw that the IRS had received $0 from him for the year. This willful neglect is not just harmful to the employees, but is highly illegal. The poster indicated they left their job.
Word to the wise: Scrutinize your tax forms and file your tax returns. If you’re feeling really motivated, sign up for the Social Security Agency’s online portal to track the withholding you have made in past years to make sure your money is getting where it’s going.
4. Redditor asks why there are “convenience fees” to pay bills online
On March 12, /u/hhhax7 took to /r/investing to ask a simple question: “Why does my bank charge a $5 convenience fee to pay my mortgage online?” It’s a question that maybe you’ve asked yourself before while paying a credit card bill, a mortgage or tuition. Wouldn’t it be easier for a bank or vendor to just be paid online? It’s less to keep track of.
It turns out that banks see the flexibility they’re creating as value added. The simple answer is that it’s a ‘convenient’ way for a bank to make some money.
Commenters also discussed ways to avoid the fees. Redditor /u/OutofStamina noted that you should “avoid the account with fees when you can.” They added that it doesn’t dawn on many people that they can have more than one bank account or shop for banks, recommending that people should leave banks for credit unions that don’t often have these fees.
Word to the wise: If you’re looking for more reason why you should be reconsidering banks, check out our video where SPAC king Chamath Palihapitiya explains why banks are screwed.
5. /r/personalfinance shares stories about timeshare salesmen and their attempts at manipulating them
On February 16, /u/kildragoth posted “My Experience with a Timeshare (Wyndham) Sales Team in Vegas” where he goes into how a timeshare salesmen made attempts to manipulate him and his girlfriend into spending hundreds of thousands of dollars at a seminar.
The couple was invited to a seminar which offered them vouchers at the casino. /u/kildragoth was hesitant to entertain it. They decided to go to the seminar after a company offer of a free hotel stay and breakfast even if they decided not to buy anything. It turns out that it was not as mundane as imagined. The couple was essentially taken hostage by the salesmen and pressured to make an expensive decision to buy a timeshare they didn’t really need.
In the comments, dozens of redditors shared similar stories about how they attended sales pitches to get free Disney tickets, Cirque tickets and hotel/dinner vouchers. In almost every case, the commenters indicated that they too had experienced the pressure and manipulation tactics.
Word to the wise: Avoid the timeshare and sales conventions during your next vacation — even if the rewards for attending look really good.
6. /u/cookingboy and /r/investing subtly point out Nikola’s fraud a month before it’s reported
On August 5, /u/cookingboy took to /r/investing to share a CNBC article that said the entirety of Nikola’s $36,000 revenue for the quarter was derived from a single solar panel installation. The installation was for none other than the company’s executive chairman and CEO Trevor Milton. At the time, the electric vehicle company was worth over $15 billion and hadn’t sold a single car.
/u/cookingboy said that “Trevor Milton is closer to Elizabeth Holmes than Elon Musk.” And it turns out that he was right. Nearly a month later, fraud accusations prompted Milton to leave. Since then, $NKLA has dropped over 62%.
Word to the wise: If it feels like a scam, it probably is a scam. Please stop investing in pre-revenue companies that don’t make anything.
7. One redditor spent $1,000 on an investing course; offers the spark notes for free
Imagine: You’re swiping through Instagram and suddenly you get a story with some video of a frat boy with an expensive car saying something like: “hey, what’s up guys. My name is *insert frat boy name,* and I’m going to tell you how I make $38 million in fifteen minutes using options.”
In the last few years, there has been a rise in opportunistic investor personalities on social media. Unsurprisingly, they’re making a mint by charging people for classes covering basic investing subjects.
/u/swagbasket34 is one of the people who helped contribute to that mint for a noble cause: to summarize the content of one such investor’s 18-hour, $1,000 investing course for free. Some of these courses are revered for their complexity and meaningful intros to investing, but what surprised us most was that the course’s topics could easily be covered with a simple Google search. Check it out and judge for yourself.
Word to the wise: Avoid lofty and expensive courses made by hustlers. This doesn’t just apply to investing, but all topics. In recent years, there has been a rise in universities and bootcamps charging thousands for information. Odds are with a little bit of motivation, you could teach yourself that information with Google or even social sites like Youtube and TikTok. For starters, we recommend checking out Dumb Money on YouTube and Austin Hanwitz on TikTok.
That wraps our 2020 best of /r/personalfinance and /r/investing. We’re excited to see what 2021 will bring for the world of financial Reddit.