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Millionaires Keep Giving Bad Money Advice
Celebrities and finance influencers keep telling you to earn passive income, find tax loopholes, and cut your spending – but that advice is actually making your financial situation worse, not better.
Having millions of followers doesn’t necessarily mean they know how to build wealth. And the strategies that made them richer could actively work against you.
I passed the CFP® exam at 16, and in this video I’m going through their most popular advice line by line to show you exactly where it falls apart.
Kevin O’Leary
I understand where he’s coming from, since many people spend money on things they don’t actually enjoy just out of habit. But if buying coffee or lunch is something you really enjoy, it’s okay to spend on it.
Just make sure you’re on track in other areas, like paying off debt and investing.
And if you’re trying to reduce your expenses, focusing on the big 3 – housing, food, and transportation – is generally a more effective than looking at individual smaller expenses that he’s talking about.
And if you think this advice is out of touch, just wait until we look at Mark Cuban further down.
Graham Stephan
It’s true that businesses can deduct their expenses.
But while studying for the CFP® exam, one of the first things I learned about the tax system is that corporations need an actual business purpose beyond just reducing your tax bill – and using one to pay your living expenses is straight up illegal and could land you in prison.
Plus it’s true that being rich allows you to hire tax experts and push the tax code to its limits, but that doesn’t mean you can just do whatever you want. Because if you go too far, you could still get into trouble for tax fraud.
Mark Tilbury
These side hustles might work, but the problem here isn’t the ideas themselves.
Showcasing the astronomically high earnings of some of the most successful people as a benchmark is irresponsible and it just sets people up for disappointment. For every person who makes $100,000, there are hundreds who fail.
There are many good side hustles that might not make you a millionaire, but they are a lot more consistent. Some examples include managing social media for local businesses, optimizing websites, and creating YouTube thumbnails.
Mark Cuban
Well that’s easy for Mark to say. But this requires a lot more effort than he makes it seem because you’ll need to show businesses why they need AI and also why you’re an expert who they can trust.
If you’re able to convince them, it could be quite profitable. But it’s a lot more work than solving some problem they’re already facing.
But I have a bigger concern about Mark encouraging you to teach your friends to cheat on papers
Call to Leap
The sales pitch for covered calls is great – earn some income for just owning your portfolio, without any real risk of losing money since you own the underlying asset.
But here’s how covered calls actually work: You sell someone the right to buy the stock from you at a set price, which is called the strike price, until a certain date.
If the stock doesn’t hit that price, then you keep the premium, which is your profit.
But here’s the problem: if the stock goes up beyond the call’s strike price, the owner would exercise the call, which means they buy the stock from you for less than its market price. This means you lose out on all the appreciation.
Here’s how harmful this is: Research shows missing just the 10 best days during a 30 year window would cut your returns in half.
And if you sell covered calls, you would definitely miss those days. Plus, the high taxes and transaction costs mean that for most retail investors like you and me, it’s better to just buy and hold stocks over the long term.
But even people who hold stocks over the long-term are making a few mistakes that are easy to avoid.
Check this out to avoid the 4 most common beginner investing mistakes that cost investors tens of thousands over the long run: 4 Investing Traps You’re Falling Into (And How to Escape)