Don't Follow These 4 Bad Money Rules, Cautions Wall Street Expert

Lots of financial advice is making the rounds on social media, and unfortunately, it's not all good advice. While there are trustworthy financial influencers, there are also plenty who share terrible ideas in the hopes of gaining more followers and selling products.

Wall Street expert Vivian Tu is one of the trustworthy ones, and she shares quality personal finance advice on her channel, Your Rich BFF. Recently, she published a video with four bad pieces of money advice that she says you shouldn't listen to.

1. Day trading

Day trading is when you buy and sell stocks on a daily basis. This is a popular get-rich-quick scheme, and there are tons of grifters on social media who pretend it's a great way to make money. They'll tell you how much they've supposedly made, pose next to rented Lamborghinis, and explain how all you need to do is buy their course to start making the big bucks.

Research has proven that day trading is not, in fact, a great way to make money. Tu says in her video that 85% of day traders lose money in the long term, and that's likely the conservative estimate. It could be as high as 95%. Either way, those are lousy odds. You're much better off with long-term investing, which has proven to be a much safer path to building wealth.

2. Avoiding all debt

Debt often gets a bad rap. Some people consider debt bad and think you should avoid it at all costs. Tu disagrees and says that debt is a useful tool, with mortgage loans being one example. Her logic is that if you can borrow money for less interest than you can earn by investing it, you come out ahead.

This makes sense, and Tu also correctly points out that rich people use debt as a tool all the time. There's no reason to fear debt or rush to pay off low-interest debt, like your mortgage, as fast as possible. However, this doesn't mean you should have a cavalier attitude about debt. You still don't want to overextend yourself or take on high-interest debt, such as credit card debt, if you can avoid it.

3. Cutting small expenses

For decades, out-of-touch financial gurus have spent far too much time talking about cutting small expenses. As Tu puts it, "Starbucks is not the reason you can't afford a house."

Instead of micromanaging every dollar you spend, focus on the things that have a big impact. These include saving and investing consistently, and regularly looking for opportunities to raise your income. Investing 10% to 15% of your income could help you accumulate hundreds of thousands or even millions of dollars by the time you retire. If you can manage that, it really doesn't matter if you splurge and treat yourself from time to time.

4. Canceling old credit cards

Tu's final piece of advice is not to close your oldest credit cards. She says that doing so will shorten your credit history and ding your credit score. If you have a card you don't want that's costing you an annual fee, Tu recommends that you downgrade the credit card, which you can do by calling the card issuer.

It's worth mentioning that Tu's advice isn't entirely correct here. When you close a credit card, it stays on your credit report for 10 years, so it doesn't shorten your credit history anytime soon. During that period, it can still raise your average credit history and, in turn, your credit score. However, closing a card does mean that you lose its credit line. That can impact another factor, your credit utilization ratio, if you're carrying any credit card balances.

As a general rule, it's good to keep your credit cards open, especially your oldest cards. But it's not an absolute must. Even if your score goes down after closing a card, it will bounce back if you continue managing your credit well.

With so much money advice out there, it's important to separate the good from the bad. The four things that Tu mentioned are all tips that you can safely ignore.