3 'Get Rich Quick Schemes' on TikTok to be Cautious Of

TikTok Get Rich Schemes

TikTok is all the rage right now, and not just for scantily clad women in bikinis attempting Jell-O handstands (or worse). TikTok has quickly turned into a popular resource for personal finance advice.

As the saying goes "A fool and his money are soon parted", and in this case it couldn't be closer to the truth. Many a young person has lost their hard-earned cash through some ‘get rich quick scheme; on TikTok or other social media platforms.

Anyone spent their teenage years saving money from a McDonald's Drive Through Consultant wage? Then you know what I mean about hard eared cash.

While there are some genuine wealth specialists on the app, there is a lot of financial advice floating around on TikTok that is misleading or just plain silly.

Get Rich Quick Scheme TikTok

GOBankingRates recently asked a series of financial advisors to debunk some of the worst money advice on TikTok.

  • Myth #1 (currently trending) Buying into 'Newer Cryptocurrencies Early' Will Make You Rich

 TikTok user @superhexwin recommends buying into new cryptocurrencies such as HEX, as a way to get rich, under the premise that people who bought into bitcoin and Ethereum early are apparently "now extremely wealthy."

Why this is bad advice: Alex Klingelhoeffer, Senior Wealth Advisor at Exencial Wealth Advisors says“Yes, assets can and do go up astronomically. Famously, two pizzas were once sold for 10,000 bitcoin that would now be worth $350 million, however, the rise of bitcoin doesn’t demonstrate that every cryptocurrency on the market will see the same surge in value.

As of 2021, the main usage of crypto is a greater fool item, i.e., you buy it to sell to someone else,” Klingelhoeffer continued. “There are lots of coins nowadays and 99% of them will be worthless in less than three years".

But why is this? Because there is a limited number of people willing to put a large portion of their net worth in cryptocurrencies and those that rise to the occasion obviously require some liquidity.

"Until there is a coin with a demonstrable real-world utility better than traditional banking in terms of functionality, power consumption and, most importantly, legality, crypto is just a space to speculate and see if you can hit a winner.

I don’t begrudge folks who go to the casino for the same reason.

It’s fun — buy with what you can afford to lose.

  • Myth #2: Anyone Can Teach Themselves How to Day Trade and Be Successful at It-

 Heaps of TikTok personal finance content rotates around day trading and how different users have found financial freedom doing it. However, this is not an investment strategy that experts recommend.

Why you should be cautious: Will Rhind, founder and CEO of GraniteShares, a New York City-based ETF issuer with over $1.5 billion in assets under management) explains it like this: “To be consistently successful at day trading, you must have significant capital, time and emotional stamina — attributes most individuals do not possess.

While first-time day traders might initially have beginner’s luck, they are probably more likely to suffer losses over time. T

hey could lose their entire investment, or even worse, go into debt if leverage was applied.

It’s critical to never speculate with more money than you can afford to lose.”

Mr Rhind advises concentrating on creating long-term wealth instead of short-term gains: “You’re probably better off putting your money in a diversified investment vehicle that eliminates the guesswork,” he said.

“Exchange-traded funds, for example, offer tax-efficient, low-cost and transparent exposure to a basket of securities that trade on an exchange just like a stock. There are thousands of ETFs available that solve for a variety of investment objectives, such as capital growth, wealth preservation, income generation and inflation hedging.”

get rich quick schemes tiktok

  • Myth #3: You can pay less for hotel stays if you buy their points 

This man claims you can purchase points directly from an accommodation facilities' loyalty program, then use them to pay for your stay. (He claims that this gets you discounts).

C’mon, really? Well, in reality, most hotels do reward customers for buying into loyalty programs, and sometimes, buying and paying with points can be a good deal. But these types of tactics are for those more superior in the world of travel points, and there are many other areas in which you can start as a 'beginner'.

Why you should be cautious: Buying points directly from a hotel chain or airline in order to book a room or flight may work sometimes, but it's not guaranteed! And there’s almost certainly risk involved, the room or ticket you want might want can change by the time you go to redeem the item. Once you buy points, you can’t return themIt’s cash you can’t get back.

Brian Kelly, founder and CEO of the Points Guy, explains it like this: “In general, there are arbitrage opportunities with buying points. But for the average person, I don’t recommend it unless you have a specific redemption in mind".

Before buying a bunch of points to book an expensive, full-price room through, for example, Hyatt.com, Kelly recommends that a better route is to look at sites such as AAA or Hotel Tonight, where you can often snatch up a much better deal.

It’s also necessary to consider the value of the calculation you’re making. For example: for some people, buying points to purchase a first-class airline ticket may be worth it for a comfortable experience (say you're a terrible flyer or get really sick on planes), while for others, it’s just not a big deal.

Bottom line: If you’re new to the points game, buying points isn’t the best place to start.

Kelly emphasized that “The best place to start is just getting an intro credit card with a nice sign-up bonus, that doesn’t necessarily mean a no-annual-fee card, just look at the perks and benefits to calculate what’s the best deal. If you can’t pay off your credit card bill every month, these types of cards may not be for you, because the interest rates can be so high the points benefits are basically wiped out.

“The points game is winnable, but you need to be on your game in terms of paying off your bills in full,” Kelly advised.

To end, it seems that the moral of the story is that you shouldn't spend what you don't have, and always do your research before spending your hard-earned cash.

I'll leave you with these words by the late Benjamin Franklin:

"An investment in knowledge pays the best interest."

Note: the author of this article is not a financial advisor and no part of this should be taken as financial advice, always consult a professional before making financial decisions. The excerpts in this article are from qualified and experienced financial experts.

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