By Kyle Bloyd
TikTok is an immensely popular social media platform, but as a source of sound financial advice, it’s a mixed bag at best.
Young adults and teens form the base of TikTok’s massive audience, but whoever is watching these short video clips about various financial aspects needs to be careful and discerning. Most of all, do your homework and tap into a variety of trusted, verified sources before making important money decisions. The downside of TikTok’s quick-hitting money teachings is that some of them come from unverified sources with large followings. The result can be the perpetuation of financial myths, scams, and too many viewers following misleading financial information.
TikTok’s videos span the spectrum – from home-buying to stock picks, investment ideas and retirement savings. On the positive side, TikTok does have experts dispensing sound financial information, making videos such as discussing how to get out of credit card debt and informing young people how to start investing for retirement.
But TikTok viewers should be especially wary of get-rich-quick videos. Do research on all of the approaches presented, be it investing, passive income or other money hacks. The viral video where a random person basically ensures a rocket launch to financial bliss is a signal to run for the hills – or to a real professional advisor who can sort out the practical from the overly risky and non-sensical.
Also important to remember: on any social media app it can be difficult to differentiate paid content – ads – from regular content. Paid content TikTok videos are really advertisements, thus the creator’s first priority is selling a product. Financial products on TikTok sometimes are presented as “get rich” strategies.
Check their credentials
While it’s good for young people to get interested in the stock market and personal finance, they should not invest based solely on one TikTok “expert” – sometimes wrongly considered an expert simply because they have tons of followers. Remember, the internet is loaded with amateur experts. Many of TikTok’s personal finance influencers lack financial credentials.
Before you are wowed by someone’s snappy, one-minute video about what they think is the best retirement account, look into who they are. Do a thorough internet search. Do they have listed credentials or a website? What makes them an expert, one on a par with your financial advisor? Are there articles in respected publications or online news sites quoting them about financial matters?
The nature of such financial info videos, after all, is to wow people in a short timespan while providing little of the detail one would see in an article. For example, a good number of TikTok’s videos are about cryptocurrency, but when you’re tempted to put money into the cryptos that many people are talking about today, remember some of these videos exclude important information, provide wrong information, and encourage taking high risk.
Pushing crypto or one stock over another is nothing but the ill-advised approach of chasing returns. I’ve seen over the years that chasing returns never works. Stocks are meant for the investor who is in it for the long haul, based on reputable sources and knowledge.
Also beware of following the crowd and buying stocks the TikTok video creator says that everyone is buying. While it’s tempting when famous people are buying those stocks and championing their value, remember, some of those choosing to invest in those popular stocks have much higher risk tolerance and different goals than you do.
Speculative stocks are risky, and one reason they are is the questionable information about them. Where do these people that are giving financial advice on speculative stocks get their research from, or are they just throwing out their opinion without having supporting facts? Investors who follow their advice are taking a huge risk with a chance of little potential reward.
The best investments for anyone from young adults to retirees are stocks that have a track record they can follow. I encourage them to find sources that are worth reading and continue to do their homework. They should ask these kinds of questions: Does the kind of investment they are considering fit within their financial plan and asset allocation? Does it have sound investment merit?
Remember: Making good financial decisions takes time and effort. You can’t expect to learn most of what you need in a 60-second video. Think of it as an introduction to a concept – one maybe worth exploring, one maybe worth ignoring for your own good.
See Also: Senators Question TikTok For Biometric Data Collection
Kyle Bloyd is a senior financial advisor and vice president of Revolutionary Financial Group, with offices in Bluffton, S.C., and Louisville, Ky. Bloyd focuses on clients’ specific financial objectives and what is in their best interests when crafting investment strategies for retirement.
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