Multimillionaires and billionaires like Grant Cardone know a thing or two about money — and many aren’t afraid to dole out advice. On the surface, modeling your money moves after someone who has realized significant financial success might seem like an obvious choice, but it’s not always that cut and dry.
GOBankingRates spoke with two financial advisors to get their take on the value of money advice from multimillionaire influencers. Here’s what they had to say.
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Kevin C. Feig, CFP, CPA/PFS, Founder of Walk You To Wealth
“There is no shortage of entertaining financial gurus, such as Dave Ramsey, Robert Kiyosaki, Suze Orman and Jim Cramer, who are touting financial advice — which is labeled as ‘not advice’ for regulatory purposes,” said Kevin C. Feig, CFP, CPA/PFS, founder of Walk You To Wealth. “These recommendations, which would be better labeled as ‘financial fiction,’ are OK at best, and downright dangerous to your wealth at worst.”
He said this is a major issue, since many people rely on social media financial advice from the individuals listed above and other lesser-known influencers.
“This is the wealth equivalent of the Tide Pod challenge from a few years ago,” he said.
Feig shared a rundown of his thoughts on advice from Cardone and a few other prominent wealthy financial influencers.
Grant Cardone
Feig highlighted the real estate mogul’s 40/40/20 rule, guiding people to set 40% of their income aside for taxes, invest 40% and use 20% for living expenses. He said this can be a great move if you’re able to invest 40% of your income, but doing so isn’t realistic for the average American.
“For example, the median household income in the United States is approximately $75,000, which would require you to live off $15,000 per year, which is significantly below the poverty line,” he said. “Additionally, the average income tax rate in the United States isn’t close to 40%.”
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Dave Ramsey
In retirement, Feig said it’s generally recommended to stick to a 4% withdrawal rate. However, he noted that Dave Ramsey has recommended an 8% withdrawal rate to his radio show listeners.
“If you were to follow this entertaining suggestion and withdraw 8% a year, then I would highly recommend that you also update your resume for when you have to go back to work during your twilight years,” he said.
Suze Orman
During a 2018 episode of the Afford Anything podcast, Suze Orman described having $2 million in retirement savings as “pennies in today’s world.” Feig disagreed with this statement.
“This level of inaccurate information, gross exaggeration and blatant fearmongering does little to help everyday Americans who are trying to improve their financial lives,” he said.
Roland McIntyre, CFP, ChFC, Founder of Mountaintop Wealth
If you enjoy listening to money advice from wealthy financial influencers, doing so isn’t necessarily unhelpful, said Roland McIntyre, CFP, ChFC, founder of Mountaintop Wealth.
“It’s certainly motivating to the average person, because these millionaires are saying, ‘If I can do it, you can too,'” he said. “So if Grant Cardone’s video causes you to study more about a topic — great.”
However, he noted that the strategies promoted by millionaire money influencers may not necessarily work for you. Therefore, before making any major purchases or money moves based on their recommendations, he advised meeting with a CPA, CFP or lawyer to review your unique financial situation.
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This article originally appeared on GOBankingRates.com: Is Money Advice From Grant Cardone and Other Multimillionaires Actually Helpful?
