What You Learn From a Year of Watching Bad Financial Advice on TikTok

One anonymous finance professional has been tracking the worrying number of get-rich-quick schemes on the platform. "It's getting really bad," he says.
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Source: Twitter

Use your student loans to buy a fixer-upper! Buy a stock on Robinhood and simply sell it when it’s worth more!! Don’t max out your 401(k) under any circumstances!!! This is a smattering of the financial advice available to Generation Z on TikTok, where a new generation of investor influencers are funding their own lifestyles by doling out unconventional and highly questionable get-rich-quick schemes to viewers willing to take on a whole lot of risk. 

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One anonymous financial professional has been tracking the industry with growing concern. Going by the name @TikTokInvestors on Twitter, he has spent the last year and a half surveying TikTok and helping other people understand just how much dangerous advice is being handed to an entire generation through an unfiltered and powerful algorithm.

As last year’s GameStop saga made clear, Generation Z is by and large willing to make some big bets in hopes of improving their lot in life. In an economy where home ownership looks like a luxury and college can throw you into years of debt, their appetite for risk makes some sense. But with more than half of zoomers now looking to TikTok (and Instagram) for advice on which altcoins and meme stocks to buy next, the downside of such a miseducation seems clear to @TikTokInvestors. 

He spoke to Motherboard about what he’s learned after a year and half of watching bad financial advice on TikTok and his real concern about what it could do to society more broadly. . 

This post has been lightly edited for clarity. 

Motherboard: So just to start, do you remain anonymous?
@TikTokInvestors:
Yeah, I'm anonymous, mainly because I’ve had a few people I posted before try to come at me.

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What does that mean?
They’ve sent me threats. So there's a little safety behind remaining anonymous, because this is their livelihood. Their livelihood is getting people to sign up for their course or something, which is an obvious scam. So they'll fight back naturally.  

What line of work are you usually in when you're not running an anonymous Twitter account?
High level here, I graduated in the 2010s. I've worked for a couple large funds but now work at a smaller office doing public and private investing.

So how did you start doing this? What was the impetus?
It was the summer of COVID, 2020, and honestly, I was just very bored but quite depressed too, and my brother was like, “Get on TikTok.” So I got on TikTok, and the algorithm on TikTok is insane and knows exactly what you want in, like, three minutes. Over the course of the next 30 minutes of me being on the app, I was getting finance videos. So as I was going through these finance videos, I was like This is the most ridiculous stuff I’ve ever seen. I'm coming from a public equity background, and I just was like What the hell is this? So I started posting it to Twitter. For the most part, people can be pretty dumb on Twitter. But there is a level of sophistication, especially on FinTwit, and some of these older individuals started watching these videos, like, What the hell's going on?  

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This was a couple months before the GameStop saga. What was your takeaway from that period?
I’d go on TikTok, and every other video would be something about GameStop. I mean, it was people just posting any video about GameStop. Whether it was good or bad or constructive or thoughtful didn't even matter. If you posted anything about GameStop, it would get a ton of views. So more and more people started posting GameStop stuff because it was getting more and more views. To the point where it was just all GameStop stuff, at least on the TikTok side. It originated on Reddit, then went to Twitter, and then went to TikTok. Once it got to TikTok, Gen Z people started to really see it.

Right before this, I saw that something like 52 percent of Gen Z gets financial advice from TikTok.
It's insanity. People watch a 30-second video on TikTok and then will actually use that information. What's really sad about all that—in my opinion—is the way that the algorithm works on TikTok is based purely off of views and likes and comments. It's not based on actual good information. The people who post good information don't get a lot of views. It's the people who post ridiculous stuff that get a lot of views.

What’s some of the most concerning advice you've seen?
There’s a guy that has roughly a million followers on Tiktok that at one point said, “You should take out everything in your 401(k) and just put it all into real estate.”  There's a guy that has over 3 million followers that said something along the lines of “If you have student loans, don't pay down your student loans. Go use your student loans and more debt to fix up the real estate, and then use the profit after you sell the fixer-upper to pay down your student loans.” On a high level, that makes sense—and I know people that have done that—but for like 99.99 percent of impressionable Gen Z TikTokers, that's some of the worst advice you could ever give. It's double leverage effectively. Most of them don't even know how to invest in real estate or how to fix up real estate or closing costs and everything like that.  

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The first one that I noticed was the couple that said that they fund their lifestyle by buying stocks and then selling them once they've gone higher or something.
When that was posted, it was during the GameStop thing. Stocks were in an up-only trend. That one went uber-viral, but to be truthful, I don't understand why that one took off. I’ve posted more ridiculous stuff than that, like liquidating your 401(k); people claiming that Shiba Inu was going to get not only to a dollar but $100 or something; AMC, we're going to have the mother of all squeezes and it's going to get to $100,000 a share without taking into consideration market cap. And here's the thing: I don't know if I'm just getting duped and these people know that it’s ridiculous, and therefore it's going to get more views on TikTok. Like, am I getting played? Or do they really believe it? I don't know sometimes.

That's an impossible question to answer. But I think what's probably less difficult to say is that regardless of what their motive is, people are taking the advice seriously.
I think that's exactly right.

Obviously, the account is funny, but how much do you worry about this stuff as a societal issue?
Right now, it's pretty bad. You go into TikTok and you try to find financial information, and it's really bad. Even the “good content creators”—when I say good, I'm talking about the ones that try to be conscious of what they're saying—say stuff that's bad. It's like a 24-year-old who hasn't worked in the financial industry trying to provide good advice.  

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But with that said, I do think that being exposed to this stuff at a much earlier age will hopefully make people more thoughtful about investing. I wish that I had this when I was in high school. I wish financial education and the opportunity to invest had been democratized the way it is right now. I would have taken advantage of that. I guess what I'm trying to say is I do think in the long term, being exposed to this at a much earlier age is beneficial. 

With that being said, it's really bad right now. It was the GameStop stuff, then the AMC stuff, then the cryptocurrency stuff, then the Dogecoin stuff. Now it's the NFT stuff. At this point, a fourth of the videos that I see him are people shilling NFT projects. “Oh man this is gonna be the next Bored Ape Whatever club.” But it's just NFT people paying them to promote whatever. Now it's getting really bad. The NFT stuff is getting really, really sketchy.

What do you mean? How's it getting sketchy in your opinion?
There are people on the app that have gained hundreds of thousands of followers just by promoting NFT projects. Every other video they promote, it's like, “This is going to be the next big thing. You guys, this is going to be the next big one. I found this the other day, and I can't believe it, but it's gonna 100x.” 

Making an NFT collection only takes a couple thousand bucks. You go to Fiverr and ask someone to create 10,000 different—I don't know—tomatoes. Then make some rare attributes associated with them, and then you go to TikTok and you pay a guy with 100,000 followers $500 to make a video. And  this person is, like, 19 years old. They're like, “Well, hell yeah, I'll make a video for 500 bucks.” And they promote it, and next thing you know, the tomato whatever sells out and the people who started the project take home $500,000 to $1 million. The setup for it is incredibly easy, but the majority of people who buy these things at mint price [will watch it] go to zero because it's shit. That is very dangerous in my opinion.

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There could be applications of NFTs that could be useful in the long term, but certainly with a lot of the more fashionable art stuff, there’s Pogs or Beanie Baby energy.
I totally agree. I do actually believe that there is some real utility and usage for NFTs in the long term. But 99 percent of this stuff is just such hot garbage. But I do think that there's some real utility and usage with NFTs in the future. You just have to get through all the shit.

I try to be empathetic and think about why people are making these decisions. And, to me, it seems like a lot of people feel like, “I don't really have a shot out of whatever kind of life I'm living. And because I'm young, I need to take big risks now, as opposed to when I'm 60 years old.” So I can kind of understand why it's happening.
I don't even know if it's that far. The majority of people who are seeing this stuff are teenagers and young adults, 17 to 25.  And I don't know if it's like, “I need to get out of my situation.” I just think it's like, “Hey, I'm just gonna throw $100-200 bucks at this because YOLO.”

Have you ever made a bad trade when you were younger? Made some bet that you regret?
Of course I did. I learned from an experience like that. But it also forced me to get into investing because I wanted to be better at it.

But I think with some of these people, it's just gambling. It's just an easy way to gamble as a high schooler or a young adult.

And a legal way.
Exactly. Without having to go to a casino or anything like that. You can literally just gamble. I mean, that's that's the type of behavior that's seen in this industry.

What's your investing strategy? If you had a moment to say, this is what people should be doing? Do this, not that.
I'm a millennial, but I act like a boomer. The majority of my portfolio is literally in Vanguard ETFs. And the rest of it's in stocks that I think are interesting, but I have a very concentrated approach. I follow these things closely. I try to model it out. I try to read the quarterly reports.

How much do you kind of blame TikTok for this? How much should we be mad at them instead of society broadly?
I think TikTok is to blame for a lot of this. The algorithm drives a lot of the user behavior. I don’t think it’s the other way around. People will start creating certain videos because they know it's going to get views on TikTok. And at the end of the day, people don't care if they provide solid financial information. They care if they get views and likes and comments. 

The technique to do that is start a video by showing, like, dollar bills in the first three seconds. Or a sexy car. Or a stock chart or something like that. Regardless of whether people say so or not, those things are interesting. People want money. People are interested in stock returns. People are interested in sexy cars or whatever. So you will end up watching that video longer than you would if somebody is trying to talk about the economy. 

So naturally it shows all the bad financial behavior because those people know how to market themselves better than somebody who is knowledgeable about the markets. So I think that TikTok is to blame for a lot of this. And I think they know all of this too. They just don't give a shit.