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Social Media: Not the Best Place for Financial Advice

Social media is one of today’s most prevalent places for entertainment, creativity, and learning. However, be cautious about blindly following financial “gurus” that give advice on these platforms.

Personal Finance Trends

After millions of people lost their jobs during the pandemic, more people are looking for ways to learn how to save and invest their money, how to become more financially savvy, and how to improve their overall financial health.

As a result, there has been a wave of so-called financial “gurus” telling people exactly how to do this. However, they may not be telling people the full truth about these goals. While there are many well-intentioned social media creators in this space, there are a number of bad actors that are misleading people on the truth about personal finance.

Cryptocurrency

For instance, some social media creators tout cryptocurrency as a “get rich quick” scheme, though they may not be verbalizing their intentions with this phrase.

Some self-proclaimed “gurus” post pictures and videos of their initial investments rising 5,000% in just one month. This is incredibly misleading because it only shows one example an investment that has performed well, but the “gurus” failed to show the performance of their entire portfolios.

It is highly unlikely for an investor to make such large returns on an investment without losing a large amount of money in another investment. It is easy to pick and choose great investments to share with the public while also hiding terrible investments.

Thus, when people look for the “one investment” to “get rich quick,” it fails to take a responsible investment approach into account. Any successful and disciplined investor knows that sustainable gains are made over a lifetime, not just one day. Investing is a long-term approach, not a short-term scheme.

Luxurious Smokescreens

Similarly, we see a number of creators on social media flaunting their luxury lifestyles and telling people how they achieved it. They often say that they “just did _____,” and offer to show others how they can do it too. This, too, is misleading because it may be a scam to sell courses that are actually bogus.

Many “gurus” use these smokescreens to distract people from the legitimacy of their purported business schemes. When you see someone with a Lamborghini and a big house and they’re willing to tell you how they obtained that, wouldn’t you be curious and maybe listen? Some of these people know this to be the case, so they rent a nice house and an expensive car to act like these people. This is the game, and many people fall for it. Often times, these individuals are not living the life they claim to be living.

“Passive Income”

Wouldn’t it be nice to make money without lifting a finger? It certainly would - but it takes a ton of work to get to this point.

We see a number of people discussing “passive investments” and “making money in your sleep.” As enticing as this sounds, it is often a trap. There are certainly passive investments in existence (i.e., real estate), but they are not established overnight. This should go without saying, but some of these self-proclaimed “gurus” are great salespeople that place FOMO (fear of missing out) into people’s minds. As we have seen in a number of investment fraud cases at our firm, this leads people to make irrational, uninformed decisions that negatively affect their financial positions.

We do not offer financial advice, but we represent a lot of people that have been given horrible financial advice and suffered major losses arising from this “advice.” There are many classic schemes at play here on social media. Thus, we caution everyone to fully investigate an investment approach before jumping right into a scheme that a social media “guru” or “influencer” promotes simply because he/she takes pictures next to an expensive car. As always, exercise proper due diligence before investing your hard-earned money.

Remember, whatever it is, let’s make sure our money is working for us and not somebody else.

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