This Is The Worst Money Advice On The Internet

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Here’s what: How to wade through the swamp of internet money advice

Spend any time on TikTok, Reddit, YouTube or others

social platforms

and you will surely find monetary advice from one strip or another. Many skilled professionals share solid advice on their popular channels, such as Tiffany “The Budgetist” Aliche and Soledad Fernandez Paulino de Wealth For All. But there are also many “tips” that you should ignore, ignore, ignore – or at least question.

I just talked to Anne Lester on how to identify bad internet money advice. Lester is the former head of retirement solutions at JPMorgan, where she worked for nearly three decades, and founder of the Aspen Retirement Savings Leadership Forum; she left JPMorgan to focus on helping Gen Z and Millennials save more for retirement and invest well. Considering that almost 40% of Gen Zers says they are learning about social media money, Lester is working overtime to make sure young people start their retirement journeys on the right footing.

“I think there’s extraordinarily solid advice out there,” Lester said. “But I also think there are some things on which, when I put on my JPMorgan hat, the hair on the back of my neck stands up because it’s so awful.”

She said there are two red flags to watch out for when scrolling through money tips online.

First: Who tells you to BUY or SELL anything in big, fat, all capital letters

You should never buy or sell anything just because an influencer says you should. Period.

“Especially things like crypto and individual stocks,” Lester said. “Some people are real believers out there hitting the table, but a lot of people – it’s a classic thing to talk about something you’re interested in and then quietly sell it behind the buyers. That lasted as long as there are financial markets. “

She said that as an investor, you should be able to explain in simple terms why you have returns on something. For example, company X makes a product that people want to buy. Over time, if the company is well managed, this is reflected in the value of the company.

On crypto, however, “I don’t see anyone who has a reasonable argument as to why it continues to rise in value,” she said.

Second: White absolutes that “everyone” should follow

When you see general advice – like “everyone should buy a house” – Lester said to question it. It may make sense to you, but no single financial decision – how to buy a home – will be right for everyone.

Lester explained that for all financial advice, there is a title that is almost always true – for example, you should save – but beyond that it all depends on your situation. Yes, you should save, but how much to save, where to put your money, and what you save for will all depend on your specific scenario and goals.

“You should have your long-term savings, as for retirement, invested in a mix of stocks and bonds. That’s good advice. But beyond that, it all starts to depend,” she said. For example, “One of the things I’ve been seeing lately is, ‘You should buy a house’ or, ‘You should never buy a house.’ Those two are terrible tips, because the real answer is, It depends. “

Ultimately, Lester’s recommendation is twofold: First, take time to question the money tips you consume, and think about its source. Most people sharing this type of information somehow make money, either by clicking (which explains the headlines of Big! Bold !, because they are designed to use our emotions and worries to make us click) or by something they are. seller.

“Younger people are very distrustful of ‘the system’ because they feel like they’re being sold all the time. I think there’s a healthy degree of skepticism about that,” she said. with their online presence. “

Making money online is not a bad thing in itself. But influencers need to be transparent about their income models so that you can consider their advice in context.

And her second recommendation: If it seems too good to be true, it is. “You can always look back on the one stock,” which exploded and enriched early investors, such as Apple or Tesla, Lester said. That will always be true. “But the reality is that this is not a sustainable or reliable way to make money.” With every single “easy” way to make money, “It works until it stops working.”

– Stephanie Hallett, Editor-in-Chief of Personal Finance Insider

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