Legit Finance Influencers Shared How You Can Spot Scams Online And It's So Important

"If it sounds too good to be true, it might just be."

2021 has been a big year for stocks, largely because there has been a new wave of investors diving into the world of Wall Street. In fact, the total number of trades in the first half of 2021 surpassed all of 2020 — mainly because of the rise of meme stocks and usage of fintech apps like Robinhood.

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Yet, even though it's a good thing that more of us are growing our cash in the market, there is also a negative side effect to this increase of new investors — more scammers. 

This isn't to say that some forums on Reddit and "finfluencers" aren't legit; it just means that as new investors we need to be conscious of the information we are using to make decisions. And even the platforms are getting involved. TikTok has recently taken measures to try to stop these scams too (that’s how bad it’s gotten).

Losing your money is never fun, especially when you consider that investing in a company (or any asset for that matter) doesn't guarantee returns. It's already overwhelming when you first start out, and now we have to also worry about scammers trying to snatch our hard-earned cash too!

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Because of these developments, I started to wonder, “What do real personal finance experts think about what’s going on? What advice would they give to people looking to get started with investing?” So I reached out to two experts who are both experienced and 100% legit. 

Here’s what they had to say about scams that are currently happening, what you should do with your money as a beginner, and who you should follow for practical advice about managing your money.

Bola Sokunbi (Clever Girl Finance) and Tori Dunlap (Her First $100K) both graciously gave me some time out of their busy schedules to provide some advice for beginner investors and tips on avoiding scammers.

Credit Caroline Beffa Photography / Tori Dunlap

For a little context, Bola became interested in personal finance after graduating from college. She wanted to learn how to manage her money and make it grow. She decided to get into the personal finance industry so that she could share her money story and journey in the hopes that it would inspire other women. She doesn’t believe there’s a one-size-fits-all philosophy or approach for managing your money, and her mission is to help women find their specific path to financial wellness.

Tori got into personal finance because she believes a woman’s greatest form of protest is becoming financially educated. After learning that women hold the majority of student loan debt in America and that they invest less of their money than men, she wanted to find a way to fight back. She focuses on teaching women to invest, to build long-term wealth, and to advocate for themselves and others.

So how do you know when you've stumbled upon one of those annoying (and dangerous) scams? Bola says building your knowledge first is the best protection. "Don't take anyone's word as gospel. Educate yourself on personal finance so you can decipher the junk and make smart decisions for yourself. Do your research and due diligence before you put your hard-earned money into any investment."

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"If it sounds too good to be true, then it usually is," she continues. 

"Knowledge is power, and it is what makes you a confident and calculated investor. When it comes to achieving financial wellness, it all boils down to education, time to allow for progress, and patience.”

It may seem like a lot of work to educate yourself when it comes to managing your finances and growing your money, but you can take it step by step (and perhaps one of these finance books or podcasts can help). If you don’t take responsibility for your finances and your financial education, you’ll run the risk of losing your money when searching for quick wins or taking risks you haven't fully thought out because “everyone on Reddit is doing it.”

And according to Tori, focusing on your long-term goals can also help you avoid getting scammed. "If it sounds too good to be true, it might just be (except for high-yield savings accounts). That’s not always the case, but I think a lot of people are drawn into investing because it’s talked about as this magical thing where if you do it juuuusst right, you might get rich!"

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"Investing is inherently a long-term game. So anything saying you’ll be able to double your money in a few months or even a year is pretty much lying to you," she advises.

"If you’re looking to start investing, start with the big names you know — Charles Schwab, TD Ameritrade, M1 Finance, Fidelity, etc. As far as vetting other experts, bounce their advice off a few other sources. It never hurts to listen to multiple voices on a subject, and you’re more likely to find what financial advice works well for you if you try a few.”

And there are definitely common red flags that you should keep in the back of your mind when entering any investing forum or whenever you encounter a new "hot tip."

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In a lot of cases, scammers love to act like their offers are always super urgent —you shouldn't ask any questions but just dive right in (YOLO is a buzzword to look out for). If you ever feel rushed by anyone to make an investment, don't give in. It's your money, and you can decide what you want to do with it. 

Another example is whenever someone is sharing a new investing strategy that you can only get access to by signing up for their exclusive course. In most cases, these courses include cobbled-up content that was stitched together from other investing books.

OK, I get it: If it sounds too good to be true, then be careful —now what?

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So if you’ve gotten this far, you may be wondering, “If I want to find legit experts to follow, who should I trust?” Bola and Tori are great follows, and luckily for you, I also asked them who they recommend beginning investors should learn from.

Tori tends to follow finance creators and experts from all walks of life. Her favorite mentions included Tiffany Aliche (aka The Budgetnista), Delyanne Barros, Ramit Sethi, Farnoosh Torabi, and Sallie Krawcheck (Ellevest). 

Bola mentioned one of her friends, Fo Alexander, as a credible expert to follow because she focuses on financial wellness for mothers, a niche that is incredibly important, especially given the impact of the pandemic.

The main takeaway: The best way to avoid scams is to take control of your education and do your research before you buy into any investment.

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Both Bola and Tori are definitely great experts to follow if you’re looking for candid and practical advice when it comes to putting your money to work. However, the most important takeaway that they both shared is that you have to take action and ownership over your education. All of the other experts they suggested will certainly help only your journey, too, and remember: If it sounds too good to be true, it most likely is.

There will always be someone out there who’s promising a “sure-fire” way to double your funds. My advice is to just ignore them. 

Have you come across any scammy "investments" in your feed? Tell us how you spotted scammers in the comments!

And for more money tips and tricks, check out the rest of our personal finance posts.