You’ve heard the phrase, “if it sounds too good to be true, it probably is”? Not everything you see online is good advice, especially when it comes to personal finance tips from self-proclaimed “finfluencers”. Joe Anderson, CFP®, and Big Al Clopine, CPA, expose what’s hype, what’s harmful, and how to protect your retirement from bad digital advice. Learn to spot online scams, separate facts from fiction, and recognize reliable insight from qualified financial advisors. Strengthen your financial literacy, improve your long-term retirement plan, and stay focused on saving money!
LIMITED TIME Special Offer! Get yours before this Friday!
Important Points:
-
- 00:00 – Intro
- 00;45 – Why 57 Percent of Americans Regret Online Financial Decisions
- 01:37 – YOLO Spending, Hot Stock Picks, and Other Viral Money Traps
- 05:12 – The Truth About Dead Equity, Credit Hopping, and Emergency Funds
- 09:24 – Social Media Finfluencers and Dubious Online ‘Strategies’
- 13:51 – How to Verify Financial Claims and Avoid Online Scams
- 17:50 – Protect Yourself from Fraud, Phishing, and Too Good to Be True Offers
Subscribe to Your Money, Your Wealth® on YouTube!
Transcript:
(NOTE: Transcriptions are an approximation and may not be entirely correct)
Joe: Most people when you’re looking for information, where do we go? The internet, of course. But is that advice or is that information always in your best interest today? Find out because we’re gonna talk about the worst advice online. Welcome to the show, folks show’s called Your Money, Your Wealth®. Joe Anderson here. I’m a CERTIFIED FINANCIAL PLANNER® with Big Al sitting right over there. Hello, Alan.
Al: Hello. I can’t wait for this one. This is kind of a new topic for us.
Joe: Yeah, people go online all the time, right? And they’re looking for really good information. Is it the best information? Is it good? Is it bad? That’s today’s financial focus.
Why 57 Percent of Americans Regret Online Financial Decisions
57% of Americans Regretted the financial decision that they made online. I gotta retire. I go online. Tax saving strategies, what’s the best investment? Going online might be a decent start, but there’s a lot of other steps that you want to take. Let’s bring in the big man to break things down.
Al: So today we’re gonna focus on that worst online advice. So let’s start at, you know, what are the sources of online advice? Good, bad. Let’s talk about the finfluencers, the financial influencers, and how they are affecting how we think about our finances. And then finally, let’s figure out how to defend ourselves or watch out for things that can happen that aren’t necessarily, Joe, in our best interest.
Joe: Alan, aren’t you a finfluencer?
Al: I don’t think so.
Joe: All right. Let’s walk into it. Online advice. Here’s the bad. YOLO. You only live once, right? We gotta go on the trips. We gotta get that new car. We gotta do things.
Al: Now, I’m not saying you don’t wanna enjoy the journey, but make sure you’re managing money for your future self. Make sure you’re saving money. Make sure you’re putting money to the 401(k). First and other savings, first paying off debt. Then you can use the extra money for some of those fun things to enjoy the journey.
Joe: I gotta tell you, I think we’re all living the YOLO life because here 30 to 39, they think they need $1.7 million in the bank to retire.
What do they have saved so far? $59,000. How about 40 through 49? They believe they need 1.3 million. They got less than a hundred thousand dollars saved. 50 through 60. You’re getting pretty close now to retirement. They think they need 1.7. They got 116. Even though they’re thinking, Hey, we need a lot more money, they still don’t necessarily have enough saved. So what do we gotta do to bridge this gap? Don’t go YOLO.
Al: Yeah, true. And Joe, what’s most surprising to me is the 50 to 59. You think at that point you’d have more saved, but that’s not what we’re seeing in the data.
YOLO Spending, Hot Stock Picks, and Other Viral Money Traps
Joe: Alright. So you’re on Instagram and all of a sudden something pops up. It’s like, get these hot stock picks now, get in right now.
Al: That’s exciting. A lot of us kind of fall for this. At least it’s Interesting to maybe look at. Typically Joe, by the time you read this in a publication or online, it’s probably already too late, right? In other words, if you know it, so does everybody else, and that stock price is probably higher. A better way to do it is a globally diversified portfolio. Instead of picking one or two or three or four stocks, pick a globally diversified portfolio because if one or two stocks go bad, you still have a good portfolio.
Joe: But this is the best investment you can possibly make is one individual stock.
Al: Yeah.
Joe: So that’s concentration. Now I will say if you, but it’s the worst in individual.
Al: You know, it can, that you can make, if you picked Apple stock in the eighties, you would’ve done rather well. But, picking that right company is very difficult in the thousands of companies available.
Joe: Yeah. You gotta think about it too. If you’re looking at it from a publication perspective, they’re probably gonna tell you what rate of return that it’s already achieved. So that’s already past news. Look at this stock. It’s done a hundred percent, 200%, a thousand percent buy now. It’s like, okay, so if you buy now, do you think it’s going to do that again over the next year, two, three years? It might’ve already made its run. If you look at individual investors, like all of us, we tend to buy in a little bit too late because of the headlines. Buy now.
Al: I guess one way to think about this is unsystematic risk and systematic risk. Systematic is the market itself. Stocks tend to go up and down at similar times, and you can’t really protect necessarily against that unless how much you have invested in the stock market. But what you can protect more against Is unsystematic risk, which is investing in one or two or three stocks. If they go bad, you’re taking on a lot of risk. If you have a globally diversified portfolio, you’re, reducing that risk substantially.
Joe: So, I mean, I’m taking on a lot of risk. This is the number of securities that I have, but that the more risk, the more return if I wanna reduce my risk. That’s when I’m purchasing more stocks. So then it’s like, how many is too many? you can buy the whole market. It’s probably gonna give you the same risk level if you buy half the market, but it’s gonna reduce your risk exposure, significantly.
The Truth About Dead Equity, Credit Hopping, and Emergency Funds
Here’s something that’s in the headlines quite a bit, especially on social media. It’s like dead equity, and what the heck does dead equity mean? It’s like if you have equity in your home. It’s like, don’t let that sitting in your home. Take those dollars out and invest it. That equity is dead. You wanna put it alive. You, for instance, let’s say you have a $200,000 home and you fully mortgage that thing out. So I’m, now, I’m taking $200,000 out. So I have a $200,000 home, $200,000 investment. if the market goes up, I double my money. But guess what also happens, Al?
Al: It works both ways. If the market goes down, you still have to pay off that debt. And I think this is particularly risky when you’re borrowing money on your home and putting it in the stock market. But it’s also Joe, it’s equally risky buying rental properties that can work in a rising market, but going the other way is a big problem.
Joe: Yeah. So if you’re thinking about, Hey, we have all this equity in our home, just understand that there is a ton of risk and by the time you get to retirement. Most people wanna be debt free, so invest within your means, understanding the risk that you’re taking on. Alright, here’s another one. Big Al. You don’t need an emergency fund, just invest it.
Al: Yeah. What’s the point? Yeah, you can always get your money anytime you want. Or maybe you got a home equity loan. You can always draw on that when you want. let me tell you personal experience. I had a home equity loan with a very small emergency fund in around 2007, 2008.
The great recession hit and the banks froze a lot of home equity loans. I didn’t have that liquid cash that I wanted. Just be careful that, Joe, I think it’s better to have three to six months of emergency cash.
Joe: Yeah, for sure. All sorts of things can happen. If you don’t have that cash available, you’re just gonna go right back into debt.
Al: We’ve seen studies of people that don’t even have enough emergency money to even pay for a flat tire, so make sure that’s not you.
Joe: Alright. How about flat tire? How about hop credit? What’s that? we’re hopping around always looking for those deals. I got this credit card. Oh, I’m gonna get points to this credit card. Then I’m gonna go to this credit card. Oh, there’s a zero balance and. Right. We’re hopping all over the place.
Al: I think this strategy can work for a very few select people, and it can work for a while, but eventually you gotta pay off that debt. You better off just figuring out a strategy to pay off that debt because when you look at what the numbers look like, the average credit card debt for people is like $8,600, 24% interest, Joe, it’s ridiculous.
Joe: Right. I mean, you’re gonna end up over 53 months being almost the same as the debt itself.
Al: Alright, here’s another one. Sometimes you hear Gen Zs or people in their twenties can wait to save. They’re so young. Don’t even worry about it. Joe, I gotta tell you, and as you know, and as a lot of our viewers know, the sooner you start saving the better.
Joe: Yeah. Really simple example, you start saving at 25 versus you start saving at 35. We got: invest a hundred dollars a month, 5% compound rate, you’re gonna double your money if you start just a little bit earlier. So it’s not like you have to save a ton, but now you have such a head start that 162 can double faster than 89 if you continue with that trend. So the early you start, of course, the better.
Al: And I think when you think about if there’s a higher rate of return, like you’re invested more in the stock market, maybe you earn 6, 7, 8, 9%, whatever you might earn, it’s a much more dramatic difference the earlier you start.
Joe: Alright. If you need help with that, go to YourMoneyYourWealth.com.
Click on our special offer this week. If you wanna do this yourself, get our DIY Retirement Guide, Go to YourMoneyYourWealth.com. Hey, when we get back, we’re gonna talk about those finfluencers, the finfluencers. That’s a mouth mouthful.
Al: That is a mouthful.
Joe: Stay tuned and we’ll be right back.
Hey folks. Welcome back to the show. Show’s called Your Money, Your Wealth®. Joe Anderson, Big Al Clopine. We’re hanging out here, we’re talking the worst online advice. Are you falling for it or are you getting better advice? Go to YourMoneyYourWealth.com. Check that out. We got our Do-It-Yourself Retirement Guide, DIY Retirement Guide. That’s our special offer. Go to the website, download it right there. Alright, let’s go to the true false question.
Social Media Finfluencers and Dubious Online ‘Strategies’
Al: 30% of Americans in 2023 got financial advice from social media. True or false? Joe, that seems like a true statement. 30%.
Joe: I don’t think anything’s bad with getting advice on social media.
Al: I don’t think so either. You just have to verify it. Just don’t take the first thing you read as gospel.
Joe: Yeah. I suppose there’s not a lot of click bait that goes on and there’s a lot of headlines and it’s like, here, I gotta get this or I gotta get that. So, yeah. Verify. So let’s talk about finfluencers.
Al: So the people that you’re seeing online, the people you’re following, the people you wanna follow. Why? Because they’re great communicators. They’re good looking. You know ’em, they’re actors, actresses, sports figures. You just have to be careful. You have to take any information they tell you and verify it.
Joe: Yeah, I think that’s the halo effect, right? So it’s like, wow, I really like and respect this individual, but they might have zero expertise in what you’re trying to purchase or, what you’re looking to accomplish. Dubious advice, Al.
Al: Well, that’s a, that’s a big one, right? So you hear someone, it sounds really good. They spent all this time marketing. You keep clicking different things. Oh, this is great. I’m gonna make a lot of money. Just be careful. What, turning $500 into 50,000, who wouldn’t wanna do that? But Joe, if it sounds too good to be true, it, very likely will be.
Joe: Yeah. We had a client that actually sent me an email on some of this stuff. It was a Roth Rescue, it was called. So it was like, convert your Roth IRA with zero taxes. And then you click through it and you go through this video, and this person sounded very credible. It was like, you can convert your Roth with absolutely no taxes. He’s like, how do I do this? And I was like, you can’t.
Al: Yeah, it’s impossible.
Joe: It’s impossible. You just can’t do it. But if you’re not in the business or if you don’t understand tax law, it’s like, why wouldn’t I rather convert? You’re paying taxes on your conversion. I’d much rather not.
Al: It sounds better. And Joe, another one is taxes. I mean, there, there are websites out there that say you do not have to pay income taxes. It’s voluntary. It’s not part of the constitution. And you know what? People try that, Joe, and they, it doesn’t work out well for them. They end up in jail.
Joe: Alright. Sense of urgency, act now. I think some of this is valid here because we’re procrastinators. Sometimes you have to act now, but it’s get on the ground floor. If it was really good, the ground floor is already full.
Al: Yeah. And how many times have you heard? Once in a lifetime. It could be in your life.
Joe: It could be, but likely it may not. FOMO you already missed out before. Don’t do it again. Everyone is buying this stock.
Al: We have a good friend. she doesn’t use FOMO. She used AMO. We try to say it’s, most people say FOMO. Afraid of missing out. Yeah, she likes AMO.
Joe: How about guaranteed returns? There’s very little guarantees in life, folks, right? Taxes and death, I guess. I think someone said, but biggest return in years, right? No risk. Huge gains. Stock market returns with no risk. High yields guaranteed right risk in return are related. The higher the risk, right, the more return that you receive. But also there is no guarantees and a high risk.
Al: that’s well said, right? You think of something really safe like a government tbi, federal government T-bill, right? So that’s backed by the government. And by the way, government prints money. It’s pretty safe. And then you think of something like a small company, a lot more risky. You would expect a higher rate of return to invest in that small company, and that’s why there’s that relationship between risk and return.
Joe: Alright. If you want help, go to our website, YourMoneyYourWealth.com. Click on our special offer, a DIY Retirement Guide, right? If you wanna do it yourself, go to YourMoneyYourWealth.com. Click on that special offer. When we get back, we’re gonna defend ourselves from maybe some dubious advice. Don’t go anywhere.
Hey, welcome back folks. Joe Anderson, Big Al. We’re talking about the worst online advice. Are you falling for it or are you getting better advice? Go to YourMoneyYourWealth.com. Check that out. We got our Do-It-Yourself Retirement Guide, DIY Retirement Guide. That’s our special offer. Go to the website, download it right there. Alright, Big Al. Let’s go to the true false question.
Al: In 2023, Americans lost over 5 billion in frauds and scams. Wow. That’s a big number, Joe. I hope it’s not true, but I bet it is.
Joe: 10 billion. It’s double.
Al: Oh my. It’s even worse than I was hoping.
Joe: Oh, I mean, it’s crazy the fraud out there.
Al: I mean, I get emails from you, the president. You need a wire immediately?
Joe: Yeah, I need a wire. Hey, by the way, can you get me some gift cards from for Best Buy?
How to Verify Financial Claims and Avoid Online Scams
Alright. You gotta defend yourself. Here’s a couple resources for you. So if you’re looking at investment type information, you have the best investment out there. Here. Here’s a high yielding investment with zero risk. I think we could start here. Look at the SEC. You can see if they can back up their claims. You can look at firms, you can look up, different individuals if they’re registered. If they’re not registered. If they’re not registered and they’re claiming that they can offer you investment product or investment advice, I think you run away.
Al: Yeah, I think that investor.gov, that’s just a great place to start with, with information on investing as well as specific on certain investments.
Joe: Yeah, you can research the product. What are you actually buying? Is it right for you? And you know, what are the fees? What are the costs? What are the commissions? Next, confirm the identity, Al.
Al: That is true, and, this happens, it happens to a lot of us, and I just mentioned this, being in a company, they pretend like they’re the CEO or the president or something like that and send an email. I need you to call right away. I need money. It is just, be careful. You may be getting emails or even texts from people you think you know, or a celebrity or even a family member. Just be careful. Verify before you send any money on anything.
Joe: But it’s not that easy to identify if you’re kind of moving quickly through that. So. If someone’s asking you for some unusual things, you probably want to maybe take a step back and slow down, verify their credentials. So again, if you’re working with an advisor or any type of investment professional, you could look at broker check, right, check their background experience, see if they had any complaints. It’s another good site.
Al: Yeah, I mean, you just look at the stats right now we’re getting exposed to this Gen Z and millennials the most. They’re getting exposed to all kinds of scams, but Gen X and baby boomers as well, almost 40% of these people actually lost dollars and that’s where that $10 billion came from.
Joe: Of course, I think that the younger generation because they’re probably, you know, on social a little bit more or maybe on different sites or maybe that’s where the target is.
Alright, so let’s take action. What do we gotta do? A – research your investment. Take the time to research it. The pros and cons, look it up. Look up the broker, look up the financial professional or the organization. Keep your emotions in check, right? That FOMO, fear of missing out. Maybe you’re a little bit behind on your savings, you’re approaching retirement, and man, if I could just get a little bit more boost, if I could get that extra rate of return, myself, my retirement, my family would be taken care of. Trust me, making those emotional decisions have nowhere in the place of your finances. Create a custom strategy. Start with goals in mind. What are you really trying to accomplish? And then lay out that roadmap, the strategies that you need to do to execute. And then of course, there’s scams everywhere, right? You just gotta be aware. You know, if it’s too good to be true, in most cases it probably is.
Al: Yeah. And Joe, I think a lot of scams, they’re, pretty well disguised. Like for example, you get a text from what seems like your credit card company. You know what, we need some, you need to verify your information. Don’t respond to that text. If you think you might need to do it, go to the website of that bank or credit card and see if you really need to do it, because in a lot of cases these are, they’re just phishing for information, which you don’t wanna give out because it would be pretty bad later.
Protect Yourself from Fraud, Phishing, and Too Good to Be True Offers
Joe: I went to my online bank account just last week, and I fat-fingered it.
Al: Yeah. Right.
Joe: And then I’m logging in. The login look like the front page looked almost identical. And then the login credential didn’t work, and they were like, Hey, we need your Social Security number, your full Social Security number. And I almost typed it in. I was like, wait a minute. They never ask for a full Social Security number. They might ask for the last four digits. Right? Or they might ask for this, or if they’ll send you a text to put in your code and I’m there putting, and I was like, you know what? Maybe this doesn’t feel right. So I closed out. Then I redid it and I was like, wait a minute. That was a totally different site.
Al: Yeah. Yeah. And I, here’s another one. So, so this had been going around, which is people are calling up, they’re acting like they’re the IRS, your back taxes, they’re about ready to cancel your Social Security number. It’s like, and we’ve had clients, is this true? No, you can’t, your Social Security number does not get canceled. The IRS does not call you. Everything’s done usually via letter.
Joe: I just ordered something for my bed. Right. It’s called Sleep Eight, given like little cooling system in your bed.
Al: Okay. I like it.
Joe: I just ordered it, right? And then I get this text from FedEx. It was like, Hey, your package can’t be delivered. We knocked on the door, we need a signature. And then it gave me a couple of links and I was like, oh, I just ordered this thing. It must be real, right?
Al: Yeah. Right.
Joe: And then I clicked on the link, and then of course they’re asking, all right, what’s your social? What’s this? What’s that? And I’m like, yeah, I’m, no, I’m not. No, But I don’t know if they knew that I bought that thing.
Al: Yeah. And it’s like. Wow. Yeah, they’re good. They’re getting really good. they are good and I think a lot of us buy stuff from Amazon, so it seems like normal, right?
Joe: Right. Yeah, you can pay- you’ve been to my house and there’s packages every day. I get off from work.
Al: We have ’em too.
Joe: Alright, hey, go to YourMoneyYourWealth.com. If you need help with your overall finances, we have a Do It Yourself Retirement Guide. Go to YourMoneyYourWealth.com. Click on that DIY Retirement Guide. For Big Al Clopine, I’m Joe Anderson. We will see you next time folks.
Andi: Can’t get enough Joe and Big Al? Follow us on the Your Money, Your Wealth® podcast, in your favorite podcast app and on YouTube.
IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.
• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® – The CERTIFIED FINANCIAL PLANNER® certification is by the CFP Board of Standards, Inc. To attain the right to use the CFP® mark, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. 30 hours of continuing education is required every 2 years to maintain the certification.
AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.
CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period.
