INDONESIAKININEWS.COM - If you're a TikTok enthusiast, you appear to be in good company. TikTok officially has more than 1 billion mont...
From makeup tutorials to lip-syncing videos, TikTok has it all. And that includes plenty of finance videos. Some of the videos are legitimate, with advice offered by professionals with years of experience in the personal finance field. Others are what we might generously call "iffy."
Before you take financial advice from anyone on TikTok, here are some things to keep in mind.
1. Creators are not vetted
There are no applications to fill out or requirements to meet to post a video to TikTok. That means anyone (literally, anyone) can call themselves a financial expert. TikTok does not vet its creators, meaning you have to. If you wouldn't take financial advice from some guy you meet at the bus stop, why take it from a stranger you see online?
A simple Google search should be enough to give you an idea of how qualified a person is to offer financial guidance. Once you've searched for the person's name, find out:
- Where they've worked. Do they have experience in the financial sector?
- If they hold a professional certification, like Certified Financial Planner (CFP)
- How many years of experience do they have under their belt? Someone who's been in the business for a long time does not necessarily offer better advice than a newbie, but they have experienced more ups and downs in the financial markets.
- If they're trying to sell you something. Be cautious of anyone who wants you to buy their book, invest in a particular product, or otherwise part with your money. It's okay if a financial advisor has written a book. Still, if the majority of their video consists of trying to get you to buy anything, they are probably not looking out for your best interests.
2. Wild claims attract views
As a society, we've learned that outrageous behavior and wild claims attract attention. If a TikTok creator draws attention by promising something like, "With my method, you'll be a millionaire by this time next year," they're trying to lure you in. Either they're doing it to increase their views (and income), or they're running a scam.
Let's say someone grabs your attention by claiming they've found the secret to personal wealth. In their videos, they tout a particular low-performing stock. We'll call it "Acme Brick." By the time the video is over, you're convinced that Acme Brick is undervalued, and if you open a brokerage account to invest now, you can reap huge rewards once the public figures out how valuable the company is.
The value rises as you (and other viewers) purchase Acme Brick stock. And that's when the TikTok creator cashes out, selling their stock at a tidy profit. It's a scam, frequently called a "pump and dump." The scammer's job is to convince others that a so-so investment is worth far more than its current value. Once new investors push the value of the stock up by buying in, the scammer cashes out.
3. A little knowledge can be dangerous
Not all lousy advice on TikTok is the result of a scammer. Sometimes, a person is well-intentioned but not financially savvy enough to understand how the direction they're offering impacts people.
For example, someone may suggest you draw cash from your home by refinancing, then use that money to pay off credit card debt. At first blush, it doesn't sound like bad advice. The problem is that it can put you in financial jeopardy. Here are just two reasons why:
- The fees and closing costs to refinance your home could cost you more than the interest you're paying on credit cards.
- Credit cards represent an unsecured debt, meaning no one can come to your house and repossess something if you fail to make payments. Your mortgage is a secured debt. If you miss payments, the lender can repossess the home, sell it, and use the proceeds to recoup its loss. Trading an unsecured debt for a secured debt may not be the right financial move for you.
Even if you're struggling to make credit card payments, better options are available. For one, the National Foundation for Credit Counseling (NFCC) is one of the country's oldest nonprofit financial counseling services. NFCC has decades of experience helping people find their way out of debt and create a more secure financial future.
4. There is no one-size-fits-all answer
There are general pieces of financial advice that can apply to anyone. For example, "Living below your means can reduce your financial stress," and "The earlier you begin to invest for retirement, the better."
However, there's nothing nuanced about the advice offered on TikTok. By their very nature, TikTok videos can't speak to the specific financial circumstances of millions of viewers. A better bet is always to meet with a professional financial advisor who will look at your situation and help you devise a plan based on your situation.
TikTok is a lot of fun. Who hasn't enjoyed watching a husky "talk" to its owner or a 4-year-old belting out a Mariah Carey song? The trick with TikTok (as with all social media) is to carefully discern the difference between what's real and what's entertainment.
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