Financial Red Flags to Watch for on Social Media

This topic should be a fun one because it dives into something I’m seeing a lot of lately: red flags in financial advice on social media. If you’ve spent any time scrolling through TikTok, Instagram, or YouTube, you’ve probably noticed a flood of financial tips, and some of them are just… let’s say questionable. While some advice may have a nugget of value, many of these “strategies” are just shortcuts that could land you in hot water.

Here’s a breakdown of the four biggest red flags I’m seeing out there, along with some guidance on what you should really focus on to build a stable financial foundation.

1. Day Trading as a “Get-Rich-Quick” Strategy

First up: day trading. I’m seeing a lot of people on social media claiming day trading as a quick way to get rich. Now, let’s be clear—day trading has become a big trend since the pandemic hit. Everyone was at home, markets were rallying, and people had a little extra cash. We saw the meme stock frenzy take off, thanks to Reddit and the like. People were jumping into options trading and day trading, thinking they could outsmart the market. For some, it worked out short term because they got lucky in a bull market. But here’s the kicker—many of these traders were confusing a strong market with their own investing skills.

Now, I’ve been in this industry for 15 years. Let me tell you, the markets are humbling. They’re unpredictable, and it takes a lot of discipline and commitment to do well over time. Professional day traders spend years honing their skills and still experience losses. If you’re thinking about day trading, understand it’s not something you can casually dip into for a quick win. It’s a high-risk approach that demands constant attention, a deep understanding of market dynamics, and a thick skin for volatility. So, before you get drawn in by influencers making it look easy, remember that the reality is a lot more complex.

2. Leveraging Credit to Invest

Another red flag I’m seeing out there: people leveraging credit to invest. Social media is full of influencers saying, “Hey, just take out a personal loan or max out a credit card to put money in the stock market.” Or worse, “Use your home equity for a big investment—it’ll pay off in the long run!” Let me be blunt—this is risky, and it can backfire hard.

The idea of using borrowed money to “upsize” your gains might sound enticing, especially if you’ve heard about leverage in real estate or margin in brokerage accounts. But here’s the problem: when you’re investing borrowed money, you must consider the worst-case scenario. Say you took out a $100,000 home equity loan and invested it in a high-volatility stock that tanks 40%. Not only do you lose money on the investment, but you still owe that $100,000 plus interest on the loan. That’s a huge financial burden that could have long-lasting consequences. I’ve had clients who’ve seen the damage this can do first hand—it’s a risky strategy that often does more harm than good.

My advice? Don’t gamble with money you can’t afford to lose. Focus on using your cash flow wisely, and if you’re eager to invest, do it with money you already have set aside. There are no shortcuts here.

3. Promises of Guaranteed High Returns

Here’s a big one: promises of guaranteed high returns. If you’ve seen social media posts offering 15%, 20%, or even 30% “guaranteed” returns, let me be the first to tell you:?run the other way. In the world of investing, the word “guarantee” is something you should approach with extreme caution.

Sure, you might see these promises in areas like real estate or cryptocurrency, where influencers claim to know “the secret” to incredible gains. Here’s the reality: investment returns are never a sure thing, especially in those high-risk markets. If someone’s saying you can get a 20% guaranteed return, they’re either misinformed or pulling a scam. In many cases, these people aren’t even regulated, which means there’s little accountability if you end up losing money.

The truth is, there’s no substitute for smart, balanced investing. A legitimate financial advisor will never promise you guaranteed high returns. Instead, they’ll focus on managing risk and crafting a diversified plan that aligns with your goals and risk tolerance.

4. Sketchy Tax Strategies

And finally, one of my personal favorites: sketchy tax strategies. You know the ones I’m talking about—the influencer who says, “All you have to do is set up these shell accounts, depreciate this, move that around, and you’ll avoid paying taxes.” It sounds too good to be true because it usually is.

Let’s be clear—there are legitimate ways to reduce your tax liability, and I work closely with tax professionals to help my clients take advantage of them. But these strategies require knowledge, careful planning, and full transparency. Influencers hawking tax avoidance “hacks” are often toeing the line between legal and illegal. The IRS is constantly on the lookout for people who are cutting corners, and believe me, the consequences of getting caught aren’t worth it.

Instead, focus on straightforward, tried-and-true methods like maximizing your retirement contributions, HSA contributions, and other tax-deferred accounts. Think about the tax code as the play book for how to save on taxes. For whatever reason, IRS seems to like business owners and real estate investors. If you’re in real estate, yes, there are ways to accelerate depreciation—but these strategies should always be discussed with a tax advisor who understands your unique situation.

Wrapping It Up: Yes, Social Media is Flooded With Financial Red Flags

Social media has become a hotbed for quick (and sometimes foolish) financial advice, but when it comes to your financial future, don’t be swayed by the promise of shortcuts. There’s no magic formula to building wealth overnight. Smart investing, careful planning, and a long-term focus are the only real paths to success.

At Four Points Wealth Management, we focus on building sustainable financial plans for our clients. It’s not about getting rich quickly—it’s about achieving financial freedom responsibly and with purpose. So, before you fall for the latest TikTok trend promising instant wealth, think about your long-term goals and remember that real success is built over time.

If you’re ready to take a grounded approach to your financial journey, reach out to us. Let’s build a wealth strategy that doesn’t just work for today but sets you up for a successful future.

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