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Here’s What To Do: How To Break Through The Swamp Of Internet Money Advice
Spend any time on TikTok, Reddit, YouTube or others
I recently spoke with anna lester on how to spot bad internet money advice. Lester is a former director of retirement solutions at JPMorgan, where she worked for nearly three decades, and founder of the Aspen Leadership Forum on Retirement Savings; he left JPMorgan to focus on helping Generation Z and millennials save more for retirement and invest well. Since almost 40% of Generation Z say they learn about money from social media, Lester is working overtime to ensure young people start their retirement journey on the right foot.
“I think there is some extraordinarily sensible advice,” Lester said. “But I also think there are some things that, when I put on the JPMorgan hat, it makes the hair on the back of my neck stand up because it’s terrible.”
She said there are two red flags to watch out for when scrolling through online money tips.
First: Anyone who tells you to BUY or SELL anything in big, bold, all-caps letters
You should never buy or sell something just because an influencer says you should. Period.
“Especially things like cryptocurrencies and individual stocks,” Lester said. “Some people are true believers who are out there banging on the table, but a lot of people, it’s classic, talk about something you have a stake in and then quietly sell it behind buyers. That’s been going on for as long as there have been markets. financial”.
She said that as an investor, you should be able to explain in layman’s terms why you have returns on something. For example, company X makes a product that people want to buy. Over time, if the company is well managed, that is reflected in the value of the company.
However, on cryptocurrencies, “I don’t see anyone who has given a reasonable argument as to why it should continue to rise in value,” he said.
Second: Absolute blankets that “everyone” should follow
When you see general advice, like “everyone should buy a house,” Lester says to question it. It may make sense to you, but no single financial decision, like buying a home, will be right for everyone.
Lester explained that for all financial advice, there is a headline that is almost always true, for example, you should save, but beyond that, it all depends on your situation. Yes, he should save, but how much to save, where to put his money and what he saves for will all depend on his specific scenario and goals.
“You should have your long-term savings, like for retirement, invested in a mix of stocks and bonds. That’s good advice. But beyond that, it all starts to depend,” he said. For example, “One of the things I’ve seen lately is ‘You should buy a house’ or ‘You should never buy a house.’ Both are terrible advice, because the real answer is: it depends.”
Ultimately, Lester’s advice is two-fold: First, take the time to question the money advice you’re consuming and think about where it comes from. Most people who share this type of information make money in some way, either through clicks (which explains the Big! Bold! headlines, as they are designed to use our emotions and anxieties to make us do click) or something they are selling.
“Young people are very wary of the ‘system’ because they perceive that they’re being sold to all the time. I think there’s a healthy degree of skepticism around that,” he said, “but I would point out that most people online have a model of income associated with its presence on the Internet.
Earning money online is not bad in itself. But influencers need to be transparent about their revenue models so you can consider their advice in context.
And your second recommendation: if it sounds too good to be true, it is. “You can always look back at the one stock” that blew up and made early investors like Apple or Tesla rich, Lester said. That will always be true. “But the reality is that’s not a sustainable or reliable way to make money.” With every “easy” way to make money, “it works until it stops working.”
— Stephanie Hallett, Senior Editor, Personal Finance Insider
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