Beware of Bad Investing Advice on Your Socials -- Like These 3 Money Myths

According to a recent report from the Financial Industry Regulatory Authority (FINRA), 61% of social media users and "finfluencer" followers aged 18 to 34 have made an investment decision based on recommendations from a social media personality -- and these folks also reported "substantially higher fraud exposure and victimization."

A lot of financial advice found on social media is worth what you paid for it -- nothing. Here's a look at several bits of advice I've run across that are simply wrong or misleading.

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Stock market expectations

One social media pontificator said: "The stock market is one of the best tools to grow your wealth." That's very true. Over decades, it beats most other alternatives. They added that a 10% return doubles your money every 7.2 years, and a 20% return doubles your money every 3.6 years. That, too, is true -- it's the classic "Rule of 72."

The problem, though, is the suggestion that you can expect stock market returns of 20% annually. The stock market has averaged annual returns of close to 10% over many decades, not 20%. There are some years with massive gains, and some with sharp drops. But overall, expectations should be tempered.

Social Security

One poster said that "Taking Social Security at 62 instead of 67 cuts your benefits by 30%. Forever." That's true, but the person went on to say: "That's $500 less per month for the rest of your life." That's not necessarily true at all, because it depends on how big your benefits are. It's also important to understand that starting at 62 instead of 67 means you're collecting five more years of benefits -- which can amount to a lot.

Investing goals

Another person asserted that a million dollars will generate $100,000 in income per year. Well, it could, but you'd probably run out of money well before you die. That's taking 10% of your assets out annually, when they might only be growing by, say, 5% or 8%. A common guideline is to take out just 4% annually, more or less, for a good chance of having your money last 30 years.

This is a good reminder that most of us need to be saving and investing in earnest for retirement. For some, retiring with $1 million in assets will suffice, while others will want to aim for more -- or less. Much depends on your expected expenses in retirement and how far away retirement is. You can invest for the long term rather effectively via a low-fee index fund such as:

• Vanguard S&P 500 ETF (NYSEMKT: VOO): S&P 500 index funds encompass the 500 biggest companies in America, which together make up around 80% of the entire U.S. market.
• Vanguard Morningstar Total Stock Market ETF (NYSEMKT: VTI): This fund includes nearly all of the U.S. stock market, spreading your money across more than 3,500 stocks, not just 500. It includes lots of small companies, too.
• Vanguard Total World Stock ETF (NYSEMKT: VT): This ETF encompasses roughly all the stocks in the world -- about 10,000 stocks -- all in one easy, low-fee investment.

For best results with your hard-earned dollars, spend some time getting smart about money, and learn from reputable sources instead of strangers online.

Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.