TikTok Is a Never-Ending Stream of Bad Financial Advice

A recent LendingTree survey revealed that 41% of Gen Zers have relied on TikTok for financial advice in the previous month, and indeed, hashtags like #FinTok or #Money have hundreds of millions of views. But are these bite-sized videos actually giving out good advice? Often not — even comically so. In many cases, the “expert” is merely an influencer with a large audience, and no financial training of any kind. Here’s a look at some examples of terrible advice, and how to spot the good from the bad.

TikTok has all sorts of bad financial advice

The best and worst thing about TikTok is that complex topics can be broken down into easy-to-understand videos that are usually less than 60 seconds long. The problem is knowing when the advice is simply wrong, short of doing your own research. Here’s a look at different types of bad financial advice you might see on TikTok:

Well-intended advice that’s not fully thought out.

This video suggests that you can make passive income by buying candy machines and installing them in high-traffic locations. What the video doesn’t tell you is that this side hustle isn’t all that passive (machines require ongoing maintenance), and that you can’t set up shop on other people’s property without their permission, which severely hampers how many machines you can install in a secure location.

That, in turn, limits your ability to make much money from a business that doesn’t make much money to begin with (revenue from coin-based machines is about $US1 per day)

Overly reductive advice that is missing important context.

The advice in this video is how to “go from $200 to $50,000” by picking the right stocks. However, the rationale for buying the stocks is based on superficial assumptions, like buying Zillow shares because mortgage interest rates are low, for instance. But as the financial planner reviewing this clip points out, that information about mortgage rates isn’t new and is already baked into the stock price.

What you don’t know from this video is the company’s history, balance sheet, or how much debt it carries. As always, past performance does not guarantee future results.

Flat-out, completely wrong advice.

In this video, the advice is to get paid only in Bitcoin, because “who is going to get you?” The answer, of course, is the IRS (or the ATO), which is cracking down on cryptocurrencies and even hiring outside contractors to identify cryptocurrency investors whose tax returns either omit or contain incorrect cryptocurrency transactions data. If you followed this advice, you’d have to pay the taxes and face fines, maybe even criminal prosecution.

How to spot bad financial advice on TikTok

The problem is that a good chunk of these videos are made by untrained influencers who are incentivized more by likes and follows than being correct. If they’re wrong, that bad advice can be waved away with a “this is just my opinion” disclaimer, as many TikTok creators do. Therefore, if you want to spot bad financial advice, remember to ask yourself:

• Do they have any credentials? If an influencer’s bio doesn’t say they’re a certified financial planner (CFP), a certified public accountant (CPA), or a registered investment adviser (RIA), and they’re telling you what to do with your money, be very sceptical.
• Is the creator trying to sell you something? If an influencer seems to be pushing a product or a certain kind of stock, remember that they might have an undisclosed financial stake in what they’re selling.
• Is this too good to be true? No one can accurately predict future performance of the stock market, and if they could, they wouldn’t be sharing it with millions of TikTok viewers. Avoid “get rich quick” investment advice; if it sounds too good to be true, that’s probably because it is.
• Can I verify this? Often the only thing that you can verify about an influencer is whether they’re popular, but that doesn’t mean the advice they’re endorsing is correct. You’ll always want to do your own research before acting on financial advice offered in a 60-second video.