5 Dangerous Money Tips Being Shared on TikTok

Literally anyone can TikTok -- that doesn't make them a financial expert.

Whether you want kitchen hacks or kitten videos, you can find a lot of fun content on TikTok. But there's also a lot of dangerous "advice" floating around the popular video site that should be avoided at all costs. Here are some of the more common personal finance "tips" you see in TikTok videos that should be taken with a grain -- or, better yet, a mountain -- of proverbial salt.

1. "You can get rich quick!"

The modern version of the old snake oil salesmen is alive and well on social media, including TikTok. These scammers often sell simple strategies that promise you overnight wealth with minimal effort.

You know why these things always seem to be too good to be true? Because they are!

Anyone claiming they have a foolproof, three-step method for making you rich is probably getting rich off you -- not their "plan." Get-rich-quick schemes have been around since the dawn of money. Don't fall for it, no matter how many views their video has, how many likes they've collected, or how many times they've been reposted.

2. "Invest every penny in crypto."

One very common bit of advice you see from the self-proclaimed money experts on TikTok is that crypto investing will make you rich. There are countless videos telling folks to put every penny into the crypto market for easy profit.

The problems with this advice are numerous. For one thing, cryptocurrency is an extremely complex technology that is constantly evolving. There are plenty of real personal finance professionals who don't have a firm grasp on the ins and outs of crypto. Don't trust random crypto "experts" on social media.

Cryptocurrency is also highly volatile. Just look at the recent developments. Last year, Bitcoin (BTC) hit a high of over $65,000 a coin. Right now, you can pick up a coin for less than $25,000. Oddly enough, though, the TikTok advice has been the same the whole ride -- buy now, and buy a lot.

Can people make money investing in crypto? Sure. Is it guaranteed? Not even a little bit. Never invest money you aren't prepared to lose.

3. "Real estate investing is easy money."

All right, so this one is more than TikTok nonsense -- it's pushed by a lot of personal finance influencers across social media, pop culture finance books, popular blogs, and more. But that still doesn't make it right.

Yes, investing in real estate is a time-honored way to build wealth. However, it is not quick, it is not easy, and it isn't for everyone. Just ask the folks who lost fortunes on their flips after the last housing bubble burst.

For one thing, real estate investing requires significant capital. Getting one mortgage loan is hard enough; getting multiple mortgages is nearly impossible without a good deal of cash or collateral to back it up.

Profitable real estate investment can also require a lot of hands-on hard work. For example, if you plan to buy rental properties and landlord your way to wealth -- think twice. Property doesn't just magically make money. You need to find renters, collect rent, deal with contracts, maintain the property...and on and on.

4. "Anyone can be a day trader."

You can find a lot of popular TikTok videos that look like someone got halfway through Wall Street and Boiler Room, downloaded an investment app, and decided they were a day trader now.

Day trading -- buying and selling securities within a day, an hour, or even seconds -- is a high-risk technique used by large-scale investment firms. It requires being highly knowledgeable about the stock market, the global economy, and current events. A typical retail investor (i.e. normal folks trading from home) simply can't compete with the major companies.

Can you still make money as a day trader? Eh, statistically -- no. The vast majority of individual day traders lose money. Of the small number who do turn a profit, less than 1% of traders are likely to make more money day trading than they would working a regular job.

In reality, the TikTokers telling you to day trade your way to wealth are likely making more money from your clicks than they are from their own day trading.

5. "Whole life insurance is infinite banking."

This popular bit of financial advice has been making the TikTok rounds lately, but the concept has been around for decades. Basically, the idea is that you take out a whole life insurance policy -- a type of permanent insurance that can essentially accumulate equity -- then borrow against the policy to pay off other debts.

According to the TikTokers, this is like "borrowing from yourself instead of a bank."

As with everything else you see on social media, the truth isn't quite that simple. To start, the basic premise is flawed; you're not borrowing from yourself -- you're taking a loan from the insurance company. And it'll expect you to pay it back, with interest.

Failure to repay the loan can cause your insurance to lapse -- which can be costly. Oh, and some of that interest goes to the insurance company. As do any fees or commissions you have to pay.

There's also the fact that life insurance policies aren't exactly free. You pay for it. In fact, you've probably paid quite a bit if you've built up enough value to make any kind of sizable loan against your policy.

Don't believe everything you TikTok

The moral of this story? Don't get your financial advice from one-minute videos on social media.

At the very least, fact check any money tips with your own research from trusted sources. You may also want to consult actual professionals with real financial experience and accreditations from somewhere other than "the school of life."