Skip to headerSkip to main contentSkip to footer
Get our Free E-newslettersGet our Free E-newsletters
Kiplinger logoLink to homepage
Get our Free E-newslettersGet our Free E-newsletters
Subscribe to Kiplinger
Subscribe to Kiplinger
Save up to 76%
Subscribe
Subscribe to Kiplinger
  • Store
  • Home
  • Investing
  • Retirement
  • Taxes
  • Personal Finance
  • Your Business
  • Wealth Creation
    • Podcasts
    • Economic Outlooks
    • Tools
    • Kiplinger's Personal Finance Magazine
    • The Kiplinger Letter
    • The Kiplinger Tax Letter
    • Kiplinger's Investing for Income
    • Kiplinger's Retirement Report
    • Store
    • Manage My E-Newsletters
    • My Subscriptions
Skip advert
  • Home
  • retirement
retirement

7 Tips to Help Spot 'Fake' Financial News

Investors and retirement savers can’t afford to fall for false or biased financial stories touted as legitimate news. Learn how to navigate today’s information landscape.

by: Jacob Schroeder, Manager of Investor Education
May 18, 2020

Getty Images

Skip advert

Unless you live under a rock with no cell signal, your brain processes an extraordinary amount of information every day.

Americans consume five times as much information as they did in 1986 — the daily equivalent of about 174 newspapers — a 2011 study found. Outside of work alone our daily intake is 34 gigabytes of information, or 100,000 words, according to a University of California, San Diego report. That’s roughly the size of To Kill a Mockingbird.

Our brains aren’t equipped to handle such a deluge. This makes it difficult to decipher fact from fiction, or what is relevant to you and what is not — an important distinction when your money is at stake.

Daily headlines often have no bearing on one’s long-term financial goals. So, for long-term investors, most financial media is noise. But these days, the local paper and evening news have been replaced by posts, texts, tweets, podcasts, memes, videos, etc.

The advent of social media has led to a proliferation of false information, or “fake news.” For our purposes, we can loosely define “fake” as misleading, highly biased and/or utterly unrelated or unhelpful to an individual investor’s situation. Some stories are designed to leverage our emotions, which can be dangerous when our emotions are already high, such as during a market downturn or a recession. It can cause investors to consider rash decisions that prove costly.

The simplest way to avoid the noise is to turn off your devices. But it’s far more realistic, instead, to learn how to navigate today’s information landscape. Here are seven tips to help you spot “fake” financial news.

  • 10 Timeless Investing Principles

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Skip advert
Skip advert
Skip advert

1 of 7

Proceed with caution when predictions are made

Getty Images

Skip advert

Many financial articles cover what may happen in the future. Will the market rise? How will the economy perform this year? Will the Federal Reserve raise interest rates?

This is fine, expect for the simple fact that no one can accurately predict the future. There are an innumerable number of things that could occur. So, any article that makes predictions or discusses only one scenario out of many — the market is going to crash, expect another year of growth — should be taken with a grain of salt.

When thinking about your financial future, it’s far better to look to long-term trends. For example, the stock market goes up more than it goes down, and expansions on average last more than three times as long as recessions.

 

  • The 9 Types of People You'll Meet in Retirement
Skip advert
Skip advert
Skip advert

2 of 7

Consider the source

Getty Images

Skip advert

A telltale sign of an article’s legitimacy is who published it. Did it come from a real media organization? Was it created by a distinguished individual, such as a recognized economist or researcher, on their blog? Before giving a piece of information credence, take an extra step to investigate the source.

Social media is where a lot of purposefully false media is exchanged. So, it’s important to remember there isn’t a team of editors and fact checkers vetting each post.

Further, we are susceptible to confirmation bias — the tendency to interpret information as confirmation of our existing beliefs. So, you may find yourself gravitating toward media sources that match your own viewpoints. Therefore, consider reading the work of a variety of writers who hold different opinions. It will help you think of issues in a more informed and objective frame of mind.

 

  • Investors' Worst Enemy in 2021 Could Be Their Own Brains

 

  • 8 Facts You Must Know About Bear Markets
Skip advert
Skip advert
Skip advert

3 of 7

Determine if the author has an agenda

Getty Images

Skip advert

Today, content is king. A lot content is published online not to educate people but to generate sales. Businesses even pay to publish articles right alongside those written by actual journalists. This certainly includes financial media. A commodities trader, for example, may write about an impending crash in stocks in hopes of pushing gold prices higher.

So, exercise a healthy dose of skepticism.

Ask yourself: Does the author have an incentive for publishing this information? Does the author provide good evidence? Is the data presented in context? Does the author prove his work and show how he came to his conclusion?

 

  • Animal Crossing: 9 Personal-Finance Lessons From Nintendo's Hit Game
Skip advert
Skip advert
Skip advert

4 of 7

Consider the shelf-life of the topic

Getty Images

Skip advert

Misinformation takes advantage of breaking news stories and hot-button issues. Consider how important the information will be to you in the future. Is this a short-term event made into a bigger deal than is necessary? Or, is it a complicated topic that needs further consideration?

Immediate news stories will generally have little to do with how you plan to save and invest for decades in order to retire. Knowing the market is lower today than it was yesterday won’t make a difference. But sweeping tax changes or legislation on retirement — such as the SECURE ACT — might.

 

  • A Step-by-Step Guide to Being an Estate Executor
Skip advert
Skip advert
Skip advert

5 of 7

Question an article’s conclusion of any study

Getty Images

Skip advert

News reports often oversimplify or overstate the conclusion of studies, and sometimes they even completely misinterpret them. Or, they may fail to provide important qualifiers, such as the length of the study, its sample size and how the data was compiled. Maybe the study was only preliminary. One day red wine is good for our health; the next, it causes cancer.

It is much more effective for news outlets to grab your attention with definitive statements than the more rounded explanations found in most scientific journals.

A case in point: the popular research paper by Angus Deaton and Daniel Kahneman that supposedly says happiness tops out at $75,000 in annual income. The truth is that the study suggests our day-to-day emotional well-being may not increase after reaching $75,000 in income. It doesn’t say a person earning $1 million isn’t any happier or more satisfied in life than someone making $75,000.

 

  • Believing Is Seeing: How to Avoid Retirement Myopia
Skip advert
Skip advert
Skip advert

6 of 7

Ask yourself: Does this have anything to do with me?

Getty Images

Skip advert

A simple metric to use when reading financial news is to ask if the information is at all relevant to you.

If you’re a long-term investor with a diversified portfolio of mutual funds, then stock tips have little value to you. If you’re retired with enough money projected to keep you comfortable for the next 20-30 years, then you probably don’t need to click on that article about Bitcoin.

Ultimately, a financial news story is only as important as its relation to your personal financial situation.

 

  • 7 Ways to Sabotage Your Financial Future
Skip advert
Skip advert
Skip advert

7 of 7

Consider the context

Getty Images

Skip advert

The financial world is a heavily data-driven world. You have to pay close attention to the context of how it is presented. The best example is daily market performance. A small percentage change in the Dow Jones Industrial Average can look substantial when listed as the number of points down or up. For example, the Dow tumbled more than 1,100 points on March 9, 2020, but that translates to a percentage decline of 4.5% -- which doesn’t come close to the worst percentage drop in market history (-22.6% on Oct. 19, 1987).

Further, if you see financial headlines talking about the rarity of an event, take them with a grain of salt. Capital markets have a long enough history to make any data point seem exceptional if you want to. To hear the market was down 10% for the day is notable. But to hear the market has never in its history been down 10% on a Monday during a leap year is meaningless.

  • As Nobel-prize winning economist Ronald Coase said: “Torture the data, and it will confess to anything.”

    When it comes to your financial life, don’t believe everything you hear. You should make financial decisions only when you’re fully confident that you understand the situation, or under the professional guidance of a trusted financial adviser. In most respects, if you have a financial plan — and you should have a financial plan — you can essentially filter “fake” financial news by ignoring financial news altogether.

Written by Jacob Schroeder, Manager of Investor Education at Advance Capital Management (www.acadviser.com) in the Greater Detroit area.

 

  • Spring Has Sprung: 9 Tips to Bring New Life to Your Finances
This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Contributors

Jacob Schroeder, Manager of Investor Education

Manager of Investor Education, Advance Capital Management

Jacob Schroeder is the Manager of Investor Education at Advance Capital Management (www.acadviser.com/). His goal is to help people make more informed financial decisions and live happier lives. He is also the creator of the personal finance blog Incognito Money Scribe (incognitomoneyscribe.com/), exploring the mystery and meaning of money.

Skip advert
Skip advert
Skip advert
  • wealth management
  • retirement
Share via EmailShare on FacebookShare on TwitterShare on LinkedIn
Skip advert
Skip advert
Skip advert
Skip advert

Recommended

How 13 Types of Retirement Income Get Taxed
retirement

How 13 Types of Retirement Income Get Taxed

When you're planning for retirement, it's fun to contemplate all the travel and rounds of golf ahead of you, but don't forget about taxes.
June 30, 2022
33 States with No Estate Taxes or Inheritance Taxes
retirement

33 States with No Estate Taxes or Inheritance Taxes

Even with the federal exemption from death taxes raised, retirees should pay more attention to estate taxes and inheritance taxes levied by states.
June 23, 2022
10 Most Tax-Friendly States for Retirees
retirement

10 Most Tax-Friendly States for Retirees

Moving to a low-tax state in retirement can help make your retirement savings last longer.
June 23, 2022
Taxes in Retirement: How All 50 States Tax Retirees
Tax Breaks

Taxes in Retirement: How All 50 States Tax Retirees

We rated every state, plus the District of Columbia, on how retirees are taxed. Some of the results might surprise you.
June 23, 2022

Most Popular

5 Best Dow Dividend Stocks to Buy Now
blue chip stocks

5 Best Dow Dividend Stocks to Buy Now

This mini-portfolio of blue-chip dividend payers is well-positioned to both generate income and hold up to headwinds for the rest of 2022.
June 27, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
Top Bear Market Tips from 10 Financial Advisers
investing

Top Bear Market Tips from 10 Financial Advisers

When a bull market turns into a bear market, it can be hard to know what to do. Take comfort in the guidance of 10 financial professionals.
June 30, 2022
  • Customer Service
  • About Us
  • Advertise With Us (PDF)
  • Privacy Policy
  • Cookie Policy
  • Kiplinger Careers
  • Accessibility
  • Privacy Preferences

Subscribe to Kiplinger's Personal Finance

Be a smarter, better informed investor.
Save up to 76%Subscribe to Kiplinger's Personal Finance
Do Not Sell My Information

Kiplinger is part of Future plc, an international media group and leading digital publisher. Visit our corporate site www.futureplc.com
© Future US LLC, 10th floor, 1100 13th Street NW, Washington, DC 20005. All rights reserved.

Follow us on InstagramFollow us on FacebookFollow us on TwitterConnect on LinkedInConnect on YouTube