Here’s Why TikTok Is NOT The Ideal Financial Advisor

Investments September 7, 2021

Whether it’s about following the “savage” trend or about sharing life hacks, TikTok has become an ideal platform to learn. But it is essential to understand that the idea of DIYs is all good when it comes to learning the right way to open your milk carton or fixing a minor electrical issue at home; but when it comes to getting advice about investing, maybe not so much!

Solen Feyissa/Unsplash | With more people turning to TikTok for all kinds of advice, experts suggest steering clear of bogus financial wisdom circulated on the platform

When you’re talking about investing your hard-earned money, the stakes are way too high to make it a “do it yourself”, especially for someone with little experience. Short video clips of social media influencers telling you where and how to invest is hardly the best financial advice.

Agreed that you’d only invest into a product that’s widely promoted on social platforms, and we won’t deny that sometimes you may find useful tips out there as well, but how do you know what these self-declared experts share is legit? Well, that’s why we’re here!

Listed below are the worst investment advice that’s being circulated on TikTok. We’re bringing it to you so that you can educate yourself and steer clear.

Financial Independence Retire Early

FIRE, aka “financial independence retire early,” is an acronym for a movement the core principles of which are lowering expenses, saving heavily, and putting the money into index funds. This way multiple streams of income can be generated and this can help you retire early.

All of this sounds reasonable, however, the problem is that everyone’s financial situation is different. Financial advisors and planners spend hours learning about their customer’s unique financial positions before making any recommendations. Thus, the FIRE movement is definitely not for everyone.

Firmbee.com/Unsplash | Though people promote the FIRE strategy to build wealth, it doesn’t work for everyone

There’s no way social media influencers giving out this free advice can take your personal situation into consideration. So the next time you see someone sharing “secrets to their successful life at 30,” don’t get carried away. Your financial situation is quite different from theirs and there’s no guarantee that what they tried will work for you.

Forget the 401(k) and IRA

Another trending piece of advice is that long-established wealth-building strategies such as funding retirement accounts (401(k) and IRA) are outdated. However, this is unquestionably untrue and wrong.

Influencers try to degrade some of these old longstanding and countless-times proven ways of investment just because they’re boring and won’t get them enough views. Instead, influencers talk about complicated and confusing products just to stand out and appear “cool” on social media. You’re better off staying away from such advice.

Precious Metals for the win

It’s circulated on TikTok that precious metals IRAs, i.e, investment in gold and silver instead of stocks and bonds, are better than the typical IRAs in the long run. What some influencers advocate is that this can better protect your money from inflation, supply shortages, or a collapse in the financial markets. However, it is still not the best option.

Zlaťáky.cz/Unsplash | Some influencers advocate that precious metals can better protect your money from inflation, supply shortages, or a collapse in the financial markets, but this isn’t entirely true

The long-term performance and history of gold and silver indicate that it isn’t a rewarding assets class. These metals may do better than the S&P 500 in the short run, but it doesn’t make sense to be especially exclusive in a portfolio.

What now?

Well, we advise you to always be on the lookout, because most times these influencers are in only for a quick buck. Nevertheless, if you think there’s valid financial advice out there, do verify it before you invest your hard-earned money.