You Can’t Build Your Wealth on Clickbait (1Q25 Wealthwise by WEIL)

March 15, 2025

Jon Strauss, CFP®

Something’s been on my mind, and it directly affects the financial well-being of your children and grandchildren. More and more, young people are turning to social media, Google, online forums, and “influencers” for financial guidance. Phrases like “I saw it on TikTok…” or “Someone on Reddit said…” are replacing trusted sources. Frankly, that’s about as reassuring as hearing, “I learned to perform surgery by watching YouTube.” In today’s flood of information, where anyone with a platform can claim expertise, it’s becoming harder than ever to separate sound advice from passing trends, or worse, outright falsehoods.

And before I continue, let me just say—I’m not above this myself. Last year, after experiencing some lower abdominal pain, I convinced myself (through the sound guidance of Dr. Google) that my appendix was about to burst. After a trip to the ER, I learned that this terrifying ordeal was actually due to… gas pains. True story.

While I may have lost some dignity that day, I at least got advice from a real professional and moved on. But many young people are making financial decisions with lasting consequences based on misleading online advice. This newsletter will unpack some of the most widespread financial myths circulating online and offer clarity on what truly holds up. Given how much questionable advice is out there, we’ll likely revisit this in future editions. In the meantime, consider sharing this with your loved ones. It might just be one of the most valuable lessons you pass down—helping them build their financial future on real principles, not internet fads.

For each piece of questionable advice, I’ll explain:

  The Claim – what’s being said or asserted by “experts” online.

  Why It’s Misleading – the flaw in the logic, the risks, or why it doesn’t apply universally.

  The Truth – a more accurate way to think about the issue, based on real financial principles.

The Claim

“The S&P 500 Yields 8% Per Year”

You often hear, “The S&P 500 returns 8% per year on average.” While this is historically true—returns have averaged around 8% over the past 50 years—it’s misleading when treated as a guarantee for future performance. Many investors plug this figure into their financial plans as if it’s a reliable expectation, ignoring the inherent unpredictability of the market. A historical average is not a promise—it’s just a number that smooths out decades of volatility.

Why It’s Misleading

·      Past Performance Doesn’t Predict the Future

The S&P 500’s long-term average masks massive variations. The 1990s saw annualized returns over 18%, while the 2000s—the “lost decade”—had an annualized return of around -1%. Returns depend on factors such as interest rates, corporate earnings, inflation, and investor sentiment, all of which change over time. Just because the market has averaged 8% historically doesn’t mean it will continue to do so in the future.

·       Averages Hide Volatility and Risk

An 8% average return makes the market sound steady, but in reality, it’s far from smooth. In 2022, the S&P 500 fell -19.44% amid inflation, rising interest rates, and economic uncertainty, causing many to panic and lock in losses. Then in 2023, it rebounded +24.23%, rewarding those who stayed invested and leaving early sellers behind.

These two years alone show how unpredictable markets can be. Averages flatten out both gut-wrenching declines and euphoric rebounds, hiding the fact that a sharp drop at the wrong time can derail financial plans, especially for retirees or those needing quick cash. Timing the market is nearly impossible, and reacting emotionally to short-term swings often does more harm than good.

·       Time-Horizon Matters More Than Averages

If you invest consistently for 40 years, you might see something close to the historical average. But if you’re retiring in five years and experience a market downturn early on, the sequence of returns risk can significantly impact your portfolio. Two investors with the same long-term average return can have vastly different financial outcomes depending on when losses occur. A retiree who sees negative returns in their first few years of withdrawals is at far greater risk of running out of money than someone who experiences positive returns early on.

·       Future Projections May Be Lower

Making the assumption that annual returns will be 8% going forward may be overly optimistic. Major investment firms regularly update long-term market expectations, and recent projections suggest a reason to expect significantly lower returns. Given the significant outperformance of U.S. large-cap stocks over the past decade, it is not unreasonable to posit that more modest returns over the next decade may be expected. Vanguard now estimates U.S. large-cap stock returns of 2.7% to 4.7% annually over the next decade - far below historical averages. Building financial plans around outdated assumptions can lead to unrealistic expectations and major shortfalls.

The Truth

The market doesn’t hand out steady paychecks. It moves in cycles—some painfully long, some shockingly short—and no one rings a bell when momentum is about to shift. Betting your financial future on an 8% average is like assuming every summer will be exactly as hot as the last hundred years’ average temperature. It ignores the heatwaves, the cold snaps, and the freak storms that make up reality.

The Claim

“Sell Now and Buy Back When the Market Bottoms”

Market timing is the idea that you can sidestep losses by selling before a downturn and buying back in before the recovery. In theory, it sounds simple. In reality, it rarely works. Markets often keep climbing even when they seem overvalued, sometimes surging another 20% before the risks investors feared actually materialize. Selling too early often means missing out on meaningful gains before the downturn even begins.

Getting back in is just as tough. Markets don’t send an all-clear signal, and recoveries usually start when fear is at its peak. Those waiting for things to “feel safe” again often miss the strongest part of the rebound, leaving them worse off than if they had just stayed invested.

Why It’s Misleading

·       Market Timing Rarely Works - And Missing the Rebound is Costly

Even professionals struggle to predict market tops and bottoms. The best market days often follow the worst, so those who sell during downturns typically miss the sharpest rebounds. A J.P. Morgan study found that missing just 10 of the best days over 20 years can cut total returns nearly in half. Markets don’t wait for investors to feel comfortable before they rebound.

·       Uncertainty is Constant—There’s No Perfect Time to Invest

Imagine you’re at a big celebration. The music is blasting, everyone’s having fun, and the energy is through the roof. That’s usually the moment right before guests start leaving and the party winds down. The stock market often works the same way: it reaches its peak when people feel the most confident—just before a drop. By the time fear takes over, the fall has already started. Ironically, the best deals often appear when everyone’s at their most anxious, but that’s exactly when most investors stand on the sidelines, waiting for things to “look better.” In the end, they miss the chance to buy low and ride the next wave up.

·       A Good Portfolio Will Feel Bad Sometimes – That’s the Plan

A well-built portfolio isn’t supposed to feel good all the time. In fact, downturns are part of the deal. If markets only went up, there’d be no reward for taking the risk. Investors earn returns over time because they stay invested through the volatility.

And over long time periods, barring total societal collapse, markets tend to go up. Economic growth, innovation, and productivity push them higher. But in the short to intermediate term, they can—and will—drop. The key to living through the discomfort is accepting that it is likely temporary. The best way to manage a downturn? Own a quality, diversified portfolio—and when the inevitable decline happens, stop staring at your statements.

·       Conservative Investments Carry Risks Too

Moving to cash or conservative investments such as bonds might feel safer, but they come with risks of their own. Inflation erodes purchasing power over time, and sitting in low-yield investments while the market rebounds can create a significant opportunity cost. If you’re wrong and the market moves up instead of down, you miss out on years of potential gains, from which it can be difficult to recover.

The Truth

Market uncertainty is always present, and making emotional investment decisions often does more harm than good. The most successful investors don’t try to predict every market move—they stick to a diversified, long-term strategy that accounts for volatility. Instead of reacting to short-term fear, focus on maintaining a disciplined plan that keeps you invested through market cycles.

The Claim

“Dividend Stocks Provide Safe, Reliable Income”

Some financial “gurus” push dividend investing as a way to generate steady income without selling assets. The idea of “living off dividends” sounds appealing, but for most investors—young or retired—it rarely makes sense.

Why It’s Misleading

·       Dividends Aren’t Guaranteed

Unlike bonds, companies can cut dividends at any time—especially in downturns. A portfolio built entirely on dividends can lead to unexpected income shortfalls, forcing retirees to sell at the worst times to raise cash flow to supplement the loss of dividend income.

·       Dividends are an Inefficient Way to Sustain and Build Wealth

Dividends are taxed annually, while unrealized capital gains can be deferred. For young investors, reinvesting in higher-growth opportunities is usually the smarter choice. For retirees, a total-return approach - combining growth, income, and strategic withdrawals - is far more flexible and sustainable.

·       High Yields Can Be a Red Flag

A high dividend yield can often mean that investors do not believe that the current dividend payment is sustainable. Young investors are usually better off owning businesses that reinvest profits. Retirees who rely on high-yield stocks risk dividend cuts and potential principal erosion.

The Truth

Dividend stocks can play a role in a portfolio, but a solely dividend-focused strategy is rarely the best option, whether you’re just starting out or already retired. A smarter approach is focusing on total return: balancing growth, income, and flexibility to build and preserve wealth over time.

Final Thoughts: Sound Financial Guidance is a Family Legacy

You understand that true financial security isn’t built on viral trends or quick tips - it’s rooted in knowledge, careful planning, and expert guidance. But the financial world your children and grandchildren face is louder and more confusing than ever, making it critical to help them distinguish credible advice from misleading claims.

Share this newsletter with them. Use it to start conversations about smart financial decisions, the risks of oversimplified advice, and the value of professional guidance. Encourage them to call us with questions. By passing down financial wisdom and encouraging them to seek qualified expertise, you’re not just helping them avoid mistakes - you’re building a lasting legacy of financial well-being.

Sincerely,

Jon Strauss, CFP®

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