TikTok is all the rage right now, and not just for scantily clad women in bikinis trying out the Jell-O pear (or worse). TikTok has quickly become a popular resource for personal finance advice.
As the saying goes “A fool and his money are soon separated”, and in this case, it couldn’t be closer to the truth. Many young people have lost their hard-earned money to a “get-rich-quick” program; on TikTok or other social media platforms.
Did anyone spend their teenage years saving money on a McDonald’s Drive Through consultant salary? So you know what I mean about cash.
While there are real wealth specialists on the app, there is a lot of financial advice floating around on TikTok that is misleading or just plain dumb.
GOBankingRates recently asked a series of financial advisers to demystify some of the worst financial advice on TikTok.
- Myth # 1 (Currently Trending) Early Buying ‘New Cryptocurrencies’ Will Make You Rich
TikTok user @superhexwin recommends buying new cryptocurrencies such as HEX, as a way to get rich, assuming that people who bought bitcoin and Ethereum early are apparently “now extremely wealthy.”
Why this is bad advice: Alex Klingelhoeffer, Senior Wealth Management Advisor at Exencial Wealth Advisors said, “Yes, assets can increase astronomically. Famously, two pizzas have already been sold for 10,000 bitcoins which are now worth $ 350 million, however, the rise of bitcoin does not demonstrate that every cryptocurrency on the market will experience the same increase in value.
From 2021, the main use of crypto is a crazier element, which is you buy it to sell it to someone else, ”Klingelhoeffer continued. “There are a lot of coins these days and 99% of them will be worthless in less than three yearss ”.
But why is this? Because there are a limited number of people willing to put a large chunk of their net worth into cryptocurrencies and those who are up to it obviously require cash.
“Until there is a coin with demonstrable real-world utility that is better than traditional banking in terms of functionality, power consumption and, most importantly, legality, crypto is just one space to speculate and see if you can hit a winner.
I don’t blame people who go to the casino for the same reason.
It’s fun – buy with what you can afford to lose.“
- Myth # 2: Anyone Can Learn To Day Trade And Be Successful –
Tons of personal finance content from TikTok revolves around day trading and how different users have found financial freedom while doing it. However, it is not an investment strategy that experts recommend.
Why you have to be careful: Will Rhind, Founder and CEO of GraniteShares, a New York-based ETF issuer with more than $ 1.5 billion in assets under management) explains it this way: “To be consistently successful in day trading, you need to have significant capital, time and emotional stamina, attributes that most people don’t have.
While novice day traders may initially have beginner’s luck, they are probably more likely to experience losses over time. T
they could lose their entire investment, or worse yet, get into debt if leverage were applied.
It is essential that you never speculate with more money than you can afford to lose.
Mr Rhind advises focusing on creating long-term wealth instead of short-term gains: “You’re probably better off putting your money in a diversified investment vehicle that takes the guesswork out of it,” he said.
“Exchange-traded funds, for example, provide tax-efficient, inexpensive and transparent exposure to a basket of securities that trade on the exchange like a stock. There are thousands of ETFs available that serve a variety of investment objectives, such as capital growth, wealth preservation, income generation, and inflation hedging.
- Myth # 3: You can pay less for your hotel stays if you buy their points
This man claims you can buy directly from an accommodation establishment’s loyalty program, then use them to pay for your stay. (He claims this gets you discounts).
Come on, really? Well, in reality most hotels reward customers for purchasing loyalty programs, and sometimes buying and paying with points can be a steal. But these types of tactics are for those who are more advanced in the world of travel points, and there are many other areas where you can start as a “newbie”.
Why you have to be careful: Buying points directly from a hotel chain or airline to reserve a room or flight can sometimes work, but it’s not guaranteed! And there is almost certainly a risk, which room or ticket you may want to change at the time you go to exchange the item. Once you have purchased points, you cannot return them. It’s money you can’t get back.
Brian Kelly, Founder and CEO of Points Guy, explains it this way: “In general, there are arbitrage opportunities with the purchase of points. But for the average person, I wouldn’t recommend it unless you have a specific redemption in mind ”.
Before buying a bunch of points to book an expensive room at full price, for example, Hyatt.com, Kelly recommends that a better route is to look at sites such as AAA or Hotel tonight, where you can often get a much better deal.
It is also necessary to consider the value of the calculation you are doing. For example: for some people, buying points to buy a first class plane ticket may be worth it for a comfortable experience (say you are a bad traveler or get really sick on planes), while for others, it’s just not a big deal.
Bottom line: If you’re new to the points game, buying points isn’t the best place to start.
Kelly pointed out that “the best place to start is just to get an introductory credit card with a good signup bonus, that doesn’t necessarily mean a card with no annual fee, just look at the perks and benefits. to calculate which is best. agreement. If you can’t pay your credit card bill every month, these types of cards might not be for you because the interest rates can be so high that the point benefits are all but wiped out.
“The points game is winnable, but you have to be on your game in terms of paying your bills in full,” Kelly advised.
Finally, it seems the moral of the story is that you shouldn’t spend what you don’t have, and always do your research before spending your hard-earned money.
I leave you with these words from the late Benjamin Franklin:
“An investment in knowledge generates the best interests.”
Note: The author of this article is not a financial advisor and no part of this should be taken as financial advice, always consult a professional before making any financial decisions. The excerpts in this article are from qualified and experienced financial experts.
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