One of the most watched and shared content on TikTok is the get-rich-quick tip. Hobbyists and “financial influencers” offer financial advice to anyone and everyone who searches for it. Some financial KOLs even have hundreds of thousands of followers and millions of views.
However, in fact, some financial experts say that TikTok’s advice about money can make you empty.
Tip #1: You can easily make millions of dollars in passive income from real estate
One of the most frequently given financial advice on TikTok is to buy real estate, renovate and rent it out at a high price, or resell it for a profit. According to Tanja Hester, personal finance expert and author of Wallet Activism, this is not as easy as people think.
“Technically, you can make a lot of money investing in rental real estate. However, the people who promote this tend to sell properties massively when prices are high, causing the market to saturate. Besides. Therefore, they easily call it “passive income” – that is, a source of income that you do not need to spend time and effort to track, but in reality rental real estate requires a lot of costs and efforts. power to manage assets”.
If you want to make a lot of money this way, you have to be comfortable with a huge mortgage debt on many properties. You could be in dire straits if the economic crisis makes it hard to find tenants who can afford to pay rent – something we’ve seen during the pandemic.
Tip #2: Dropshipping will make you rich
Dropshipping (sales model that skips shipping) is a way to make money that many people have been talking about for a few years. The idea is that you don’t have to deal with any warehousing costs because you can simply order directly from the sites that sell to the customer. While it sounds tempting, is it really a good way to make money?
“My short answer is: not really.”said Toby Mathis, founder of Anderson Law Group: “It can be a way to make money, but I think the success rate is about 5%. Because this monetization program creates competitors with yourself in the same product category, regardless of niche like like how.”
Tip #3: Only lazy people are poor
According to some TikTok users, the only reason people don’t get rich is because they don’t follow the right lifestyle to be successful. A TikToker preached that the poor “party 24/7, don’t learn how to make money online and believe a job will make them rich”. Meanwhile, you and your followers “earn more than 30,000 dollars a month, work only 2 to 4 hours/day, be your own boss”.
Tanja Hester disagrees with this thinking. According to her, whether a person is rich or not depends on many factors, such as the family’s financial background, how much support they receive from their parents. It is true that there are rich people who come from an ordinary financial background, but this is not common. Moreover, you also can not know how the KOLs who are sharing their own ways of getting rich really have financial situation.
“It’s not right to accuse low-income people of being lazy or extravagant spending. Research shows that low-income people are much better than rich people at budgeting and management. money. They often work multiple jobs to earn enough money, which is not considered laziness.”
Tip #4: Quit your job/school/degree and invest full-time
On TikTok is spreading the idea that day trading, which can be understood as buying and selling certain stocks in a day, is a good way to make money because you can time and “predict” the coin. market direction. This also means that you will have to put aside your main jobs to focus entirely on investing.
Dominique Broadway, a financial expert who teaches stocks, trading and investing, said: “Technically, you can make money from day trading. However, most people are erratic. Besides, most investors experience greed challenges, which limit profits and often cause them to lose more money than they earn.” .
Toby Mathis advises against day trading, even for professionals. “In the US, the chance of making money in the surf style is around 5%. Over 90% of day traders will lose money. I can safely say that even for experienced traders the success rate is success when trying to day-trade or when the market is under 20% and in fact close to 10%. You’d better buy a lottery ticket.”
So should I invest my life savings based on TikTok advice?
It can be fun to try TikTok’s advice at times, as long as the worst-case outcome is losing a small amount of money rather than blowing up half your fortune. Not everyone who gives you advice is in your best interest.
“Why is this person sharing this piece of ‘advice’? Maybe they’re just a giver. But more likely, they’re promoting a course, e-book or program,” Brendan said. Dooley, president and founder of a financial planning firm in Philadelphia. “Ask yourself why someone would share money tips with others is not just a cynical approach. Investing is largely a zero-sum game. Your profits come at your expense. So you should be cautious when someone offers free money-making tips.”
If it was easy to make money from rental properties, day trading or even dropshipping, everyone would flock to do it. These methods may work for some people. But you shouldn’t approach these as get-rich-quick schemes. Anything that seems too good and easy, you need to reconsider.
According to Vice
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