What to know before risking your money with online money advice


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Resist the urge to go all in on trends

In 2021, a video on cryptocurrencies would have received a ton of views on apps, Yang noted. Today, cryptocurrency videos are more niche.

“The public attention isn’t really there anymore, especially after the FTX fallout,” Yang said.

But crypto is an example of the very loud financial trends that tend to take over people’s attention spans on social media, said Brian Barnes, founder and CEO of financial services company M1.

For investors, it’s important to remember those trends can fade, and you can get burned.

While the stock market is valued at close to $50 trillion, crypto’s market cap is now down to $800 billion, after peaking at around $3 trillion.

Compared to nutrition, crypto is more like sugary snacks while long-term wealth building is like a balanced meal, Barnes said.

By taking a balanced approach to your investments, that will give you the biggest chance to create long-term wealth, Barnes said.

Do your due diligence

Another big red flag is if an investment’s promises seem too good to be true.

Content creators may tout strategies with unrealistic returns. Unfortunately, some investors won’t know any better, Yang said.

But it is possible to spot these schemes by doing some research on your own and comparing an investment’s promises to normal returns, Yang said. The S&P 500 Index‘s returns over the past 40 or 50 years would be a good benchmark, he said.

Seek professional expertise

Social media can still help you stay up to date on the latest financial information.

But the key is to know your source. Yang used to be a financial advisor with Series 7 and 66 licenses. Other content creators may not have the same level of expertise or positive intentions.

As information on social platforms becomes more personalized, there is the risk you may only see what you want.

“There’s a little bit of confirmation bias that they seek out the information they want to hear,” Barnes said.

To get a sense of whether a strategy is sound and fits your personal goals and risk appetite, you may want to run it by a reputable professional advisor.



Read More:What to know before risking your money with online money advice

2022-12-06 18:33:53

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