With TikTok tutorials, Reddit threads, and self-proclaimed gurus crowding social media feeds, Gen Z is getting a crash course in how to build wealth fast — or so they think. From day trading tips to flashy claims about retiring a millionaire by 40, the platforms are flooded with promises of financial freedom.
FinTok might be touting all the tactics of buying low, selling high and watching the stock market all day, but personal finance expert Ramit Sethi says most of it is overkill. The host of the Netflix series How to Get Rich became a self-made millionaire in his 20s. Warren Buffett, one of the most successful investors in history, wasn’t even that young when he made his first million.
Sethi’s advice is “actually not complicated,” he told Fortune magazine. The key? Make investing seem easy and feel confident while doing it.
“My advice is, think of another part of life where you are really confident… Like if you open up your closet, you can see a simple, great outfit. That’s the same way that money works.”
So what exactly does Sethi mean?
##Rise of the ‘dead investors’
How does investing become as effortless as choosing a great fit? By setting it and forgetting it, Sethi says.
Carrying the ghoulish slang of “dead investors,” these wealth builders are actually passive investors who leave their money untouched for long periods of time. These are the people who buy diversified index or target-date funds and automate their contributions, then forget about it for years.
No day trading. No spreadsheets. And no stress tied to timing the market and the potential for emotional and poor decision-making, not to mention all those buying and selling fees.
Passive investors, on the other hand, benefit from diverse portfolios that spread out risk over time, growing wealth steadily and relatively stress-free. Research backs it up: A University of California study found that investors with higher portfolio turnover significantly underperformed the market, lagging by as much as 6.5% annually due to the “frictional” costs of frequent trading, such as taxes and fees.
Sethi himself adopts the buy-and-hold strategy. “What I do is I create a vision, I put my money [aside], I set it up to go automatically where it needs to go, and then I get the hell out of the spreadsheet.”
