If you’re looking for secrets that help you become wealthy, you won’t find a shortage of tips on social media sites like TikTok. An FINRA study found that 24% of investors turned to social media for investing advice and those under age 30 were even more likely to do so.
While social media has legitimate content that helps you build wealth or better understand your finances, you’ll also hear advice that isn’t only wrong but also potentially dangerous or illegal.
In a YouTube video, money expert George Kamel reacted to several TikTok videos focused on the secrets of the rich. We selected three of his reactions — hear his take on these pieces of advice so you know what’s worth your time.
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Taking Advantage of an LLC
A TikToker claimed that the wealthy will start a limited liability company (LLC) so they can take out loans without using their personal credit and generously write off life’s expenses. The idea is that you would use the business for most financial matters.
While IRS rules allow LLCs and other businesses to deduct “ordinary and necessary” expenses, claiming personal expenses as business expenses can get you in trouble for tax fraud. Kamel didn’t like this illegal advice and suggested avoiding credit altogether. If you do have a business, consider working with a tax expert who can help you legally maximize deductions.
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Desiring Money To Show Generosity
While many people want to be rich for the status or lavish lifestyle, one TikToker had a different goal. She discussed wanting money to pay for experiences with loved ones, such as vacations and meals and to give to charities. Material possessions, like a fancy house or designer clothes, were less important.
Kamel described this plan as “actually beautiful” and discussed how giving is important for a meaningful and purposeful life. He encouraged giving for the benefits it brings to both the giver and the recipient. Surprisingly, it could even help your career.
“I find that successful people are often generous because they’re givers and that’s made them more attractive in the marketplace and so people want to work with them,” Kamel said.
Investing $75 Per Week for Financial Freedom
This TikTok video is about investing early to benefit from the most compound growth. The TikToker used a scenario in which someone invested $75 every week from age 20 to 30 and achieved financial freedom in retirement, with around $1.8 million.
Kamel consulted the Ramsey investment calculator to verify how much the person would have with a 10% average return, 10 years of contributions and $325 per month invested. That amount would be $66,574 at age 30 and if no further contributions were made, that balance would grow to $1.3 million at age 60, $1.6 million at age 62 and $2.1 million at age 65.
Ultimately, the numbers seemed to check out and Kamel said you can expect a typical seven-year doubling time for your money.
Editor’s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
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This article originally appeared on GOBankingRates.com: George Kamel Reacts To 3 Things Rich People Know That You Don’t
