If you have ventured through the seemingly endless web of content that is TikTok you would know that it offers much more than simple entertainment. TikTok is a new platform capable of providing users with a plethora of different kinds of information that they might otherwise not have had access to. Like many other platforms, TikTok users face the same issue of attempting to navigate what content is really created to help users or to get something out of them in return.
This issue is something younger users who utilize the app for its educational content as a complement to real-world learning has to keep in mind. According to user statistics collected in 2020, 41 percent of TikTok’s users were between the ages of 16 and 24. On the financial side of TikTok, sometimes referred to as StockTok or FinTok, content creators with backgrounds ranging from finance and accounting to business use the platform to educate younger users within this age bracket about how to manage their credit, save money for a house and even start thinking about 401K and retirement savings as early as now. Although this information could be helpful to some, it increases the potential of spreading misinformation to an audience that might not know the difference.
Bearing this in mind, here are some of the app’s most misleading financial tips that content creators are spreading through the promotion of their videos online.
The Myth:
If you start an S corporation, you are not responsible for paying taxes.
The Truth:
According to the IRS, this type of business is not required to pay double income taxes on the corporate income level but is still required to pay other taxes on certain “built-in gains” as well as passive income earned by this corporation. Additionally, even if you are an employee at your own company and you control how much you pay yourself, you are still required to pay FICA taxes for Social Security and Medicare.
The Takeaway:
There is a reason for taxes and even though people try to avoid them at any cost, starting a whole corporation with the faulty premise that you can evade them indefinitely might lead one to get in over their head without understanding the whole process first.
The Myth:
Buying calls from companies like Tesla are guaranteed to make you rich.
The Truth:
First off, the call is similar to the stock of a company. The most important difference here, is that a “call” is much cheaper, but there are also more risks involved. You can make an unlimited amount of profit depending on the outcome of the bull market but if it does not reach its required profitability, then it will not be profitable, and you lose your money in the process.
The Takeaway:
A successful investment is not always guaranteed in transactions like the one above. Thorough research and understanding of how the stock market works is key to making the best decision with your own money.
The Myth:
You can pay less on hotels and flights if you buy their points.
The Truth:
Although this can sometimes work, there are risks involved that might make you second guess your investment. The first risk is that airlines and hotels can inflate the prices for these points and miles without the consumer knowing. Secondly, once you buy points you cannot return them so if your booking details change unexpectedly you are still forced to use them or lose your money.
The Takeaway:
If you are a travel novice, doing more of your own, independent research might help you decide what is more appropriate for your budget and traveling expectations. From there, you can decide what is best for you.
Conclusion:
There is always great risk involved with any type of investment, no matter how good it seems. The spread of misinformation like this will continue to occur on platforms like TikTok and all users can do to avoid this reality is fact check as they navigate its educational content and be aware of its limits as both an entertaining and educational interface.
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