With over 1 billion monthly users, TikTok has become one of the largest social media platforms. It’s not all dances and Jason Derulo songs — in the personal finance corner of Tik Tok (better known as "FinTok"), self-styled “finance gurus” share money advice, hoping to reach as many people as possible.
However, not all popular advice is good advice. After noticing some suspect advice in our own For You Pages, we sat down with a personal finance expert to discuss some of the worst personal finance advice on TikTok and get their take on how to spot bad advice on the platform.
Meet Andrew, certified financial advisor
Andrew Gold is a financial advisor at Prestige Wealth Management in Southlake, Texas. He works with clients on retirement planning, tax planning, and investing. We asked Gold to share his thoughts on the unsolicited advice he’s seen on the social media platform and asked him to weigh in on some videos we came across.
What is some of the worst financial advice on TikTok?
While some content creators may give good financial advice that can be useful, Gold explained, it’s important to remember they still often aren’t licensed professionals.
Financial advisors are typically licensed or certified financial planners. They also are expected to work in the best interest of the client, but not all are fiduciaries. It's best practice to ask before deciding to work with someone. Creators on a platform like TikTok aren’t held to that standard, so some content creators may be tempted to overgeneralize content that might not be a good fit for everyone.
The worst financial advice on TikTok usually has one of the following issues:
Assuming past performance will predict future outcomes
According to Gold, financial advisors are always taught that past performance is not indicative of future results. This is particularly so in the case of stocks, ETFs, and other popular investments. Often, he sees TikTokers riding trends based on recent success.
Gold said to be wary of content creators and social media “gurus” advising followers to go all in on popular investments based solely on their average performance.
For example, while some people made money with crypto and Gamestop stock, many lost significantly by entering investments too late. Even with popular, relatively “safe” investments such as S&P; 500 index funds, there’s always risk involved which is important to disclose.
Advising to buy stock on sale
Even when stocks reach historic lows, Gold said investors should be aware this doesn’t mean values can’t decrease further. The state of the economy, political climate, and larger global affairs affect the investment market. A good financial advisor always warns of the risks involved, even when buying cheap stock.
Gold used the NASDAQ as a real-world example: Market conditions in 1967 caused record lows for the exchange. It took an additional 15 years for the NASDAQ to climb back to record highs in 1983. Anyone who bought stocks on sale expecting to turn a significant profit had to wait over a decade to be able to see their return.
Rate these TikToks — great advice or steer clear?
We asked Gold to watch five TikToks presenting popular personal finance advice. The TikToks were then rated from one to five stars.
Five stars indicate this is great advice and could be followed depending on how it applies to your financial situation. One star indicates this is not good advice at all and shouldn’t be followed whatsoever.
Get a Credit Card at 18 to Build Credit
“Great video, but I would have used a different example than a $200 card and $16 purchase. A great tip for parents to use with their children is to add them as authorized users on their cards. Good thing is [the children] don’t even have to know you’re doing it. Some cards have different limitations than others, but in general, your children can be added as early as 12 to 15 years old and they get all of your payment and credit line history.”
4 Different Bank Accounts Everyone Needs
“I feel like it’s a little misleading calling what is actually a brokerage account an investment or index account. Index funds are what you buy inside a brokerage account. Retirement account versus brokerage just refers to the overall goal associated with the account and taxation.”
“She could’ve cut the first two [bank account options] because everyone knows what checking and savings accounts are. [This would’ve] allowed more time on the last two which are really going to benefit the user long term over their life.”
Prepare for a Recession
“I liked this video — short, sweet, and good information. I would be careful dropping the terms ‘Rich’ and ‘Wall Street’ as an influencer. There are no repercussions, but as an advisor, it can be seen as misrepresentation with the intent of providing false confidence. Our industry is crazy critical.”
Avoid Canceling Credit Cards You Don’t Use
“Good video. Clear content and examples ... I would’ve included a disclaimer just to state that by closing the card, even if it has an annual fee or the benefits aren’t great, you eliminate all the payment history you’ve had up to that point.”
“If it was your first credit card or a long-standing account, you could see your score significantly drop even if you have good spending habits on your other credit lines.”
How to Have a Successful Investing Account
“This is one of those videos that can be seen as less transparent because it doesn’t really discuss the advantages of a Roth [IRA] over other investment accounts, explain the income limitations to even be eligible to contribute to a Roth IRA, talk about the different platforms to open an account, or discuss the risks involved with investing.”
“I understand why he wouldn’t go over all this, though, because the video would be 5 minutes long in order to be fully transparent.”
“He’s also making a recommendation of doing a lump sum investment into a global world stock ETF when the entire world economy has about a 70% to 90% chance of going into a recession in the next 12 months … bad timing. He chose to show a day where he only made money on all of his accounts, which is very suspect.”
How can social media users make sure they’re getting information from a credible source?
So how can TikTok viewers protect themselves from bad advice? Gold offers two rules he follows:
1. Take non-personalized advice with a grain of salt
Don’t generalize advice and assume it works for you. While it may work for most people, everyone has a unique financial situation.
“There is almost no advice that is 100% correct for every single person. This is why it is important for an [financial] advisor or professional to understand your situation before providing you any advice,” Gold explained
2. Check your advisor’s background
The time it takes to work in the financial industry makes it hard to be a content creator. It’s best practice to assume most content creators don’t have credentials. If they list certain credentials in their profiles or as disclaimers, it’s safest to verify the information provided on your own time.
“Anyone who wants to see the professional background of someone in the investment industry can look at the website brokercheck.com,” Gold said.
“If [you] have [the content creator’s] full name, you can look them up, see their professional experience, and if there have ever been any complaints or disclosures on their record regarding their advice.”
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While most content creators likely mean well, and some provide sound advice, it’s best to take TikTok financial advice with a grain of salt. Do your own research to verify any advice before taking action, and consider consulting a financial advisor or planner for advice that’s tailored to your situation.
Editor’s note: Gold’s responses were edited for length and clarity.
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