By: Paul Morrone
My social media algorithm likely looks a lot just like yours. Or maybe it doesn’t, who knows. Aside from a skew towards my hobbies like cars, food and sports, I bet we are seeing a lot of the same financial content out there. And from a professional’s perspective, it’s quite terrifying. I can’t tell you how many ads I see filled with eye popping figures about trading algorithms designed to generate 30% annualized returns or strategies for those ‘earning a million dollars or more’ ‘paying more than $250k in taxes’ that want to ‘legally reduce their tax burden to 5-10%.’ If you’re still reading by now, you are probably laughing as well. What I encourage most people to remember is that social media is a marketing machine, and the best we’ve seen in anyone’s lifetime. The ability to reach, target and stuff ‘content’ down our throat is second-to-none in a world filled with people with 1-2 second attention spans. Let me break it down for you in the most simple of terms, if it sounds too good to be true – it probably is!
That’s not to say that there isn’t quality content out there, because there absolutely is. But you’d be hard pressed to separate the good from the bad at first glance. And typically, the good content isn’t stuff that people are paying ad fees to get out there, meaning it is much harder to find. And in many cases, quality and impactful content is a lot more boring than promises of triple digit returns and six-figure tax savings. When the lead-generating machine is running at full tilt, your feed is probably full of those paying to get their content on your phone’s screen, and trust me, Instagram or Facebook isn’t looking out for your best interest when it comes to your personal financial matters.
Those strategies ‘reserved only for the 1%.’ They do exist, and they sometimes work. But only for an even ridiculously small percentage, maybe 1% of the 1%. And that doesn’t mean you have to have a Bill Gates level of wealth or $10mm in annual income. It means that your lifestyle, goals, assets, balance sheet composition, income sources, credit rating and tax status all need to be perfectly aligned to make it work for you. There is no universal silver bullet that drops your tax bill to zero over night or trading algorithm that will give you 3x the S&P500 returns with zero downside. Prove me wrong and I’ll eat those words publicly.
My fear is that some will take this stuff at face value. You can’t ‘sell’ a tax or wealth building strategy. The strategy that works for you is unique to you, because your financial baggage is unique. Your long-term goals are unique. Your liquidity needs are unique, and your risk tolerance is unique. My word of caution: buyer beware.
And please, unless you are a professional real estate investor with deep pockets and an understanding of how to run a short-term rental business, don’t buy a million-dollar Air BNB for a tax write off!
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