Which financial growth tips actually hold water, and which ones fizzle into nothing? We found out
By Tony Dong
This article originally appeared in the Winter 2025 issue. View the full issue here.
Scroll through TikTok, and you’ll find no shortage of financial influencers, or “finfluencers,” offering the latest get-rich-quick tips and money hacks that promise to multiply your wealth overnight.
Which tips actually hold water, and which fizzle into nothing?
Can You Actually Get Rich Investing in Index Funds?
Many believe that striking it rich in the stock market requires taking huge risks, like picking the perfect stocks or jumping on trendy investments such as Bitcoin. But can steady investing in a low-cost fund – a ready-made portfolio of stocks and bonds – tracking a broad market index like the S&P 500 really turn you into a millionaire?
The answer is a resounding yes. Let’s imagine that as a young firefighter, you began investing in 1979. You started with $100 and committed to adding $100 every month to an S&P 500 index fund.
Fast forward to today. That consistent investment, compounding at an average annual rate of about 11.1%, would have grown to almost $1.2 million. Ka-ching!
How did this happen? Simply put, the 500 companies in that combined index fund expanded their earnings, distributed dividends, and increased in value as other investors were willing to pay more for each dollar of earnings they generated. In effect, you owned a big slice of the ever-growing North American economy.
All you had to do was routinely invest $100 monthly – the equivalent of skipping one night out a month – reinvest dividends, and maintain your investment during the market’s inevitable ups and downs. Not bad for a hands-off, low-cost investment.
What About the Dave Ramsay Debt Snowball Method?
Dave Ramsey is a widely recognized personal finance guru known for his outspoken opposition to debt. He advocates for the “debt snowball method” as a strategy for eliminating debt, which emphasizes paying off debts in order of smallest to largest, regardless of the interest rate.
Here’s a simplified breakdown of his approach:
- List your debt amounts from smallest to largest.
- Make the minimum payments on all debts except the smallest.
- Throw as much money as possible at your smallest debt until it’s fully paid off.
- Roll the payments from the cleared debt into the next smallest debt.
- Continue this process until all debts are paid off.
The primary benefit of this method is psychological, providing quick wins and boosting your motivation through the satisfaction of clearing smaller debts first. This can be particularly motivating for individuals who get overwhelmed by larger numbers and need to see progress to stay on track.
But the “avalanche method” – targeting debts with the highest interest rates first – may be more effective. While this approach might delay the gratification of paying off an entire debt, it ultimately saves more money in interest over time.
By focusing on the most expensive debts, you reduce the amount of interest accumulated, making this method preferable from a logical, mathematical standpoint, even if it requires more patience to see the initial debts disappear.
How Good is Gold?
Gold recently hit an all-time high of $2,674 per ounce, tempting many to consider it a lucrative investment. But before you rush to purchase gold bars from Costco, it’s crucial to understand what gold really represents.
Contrary to popular belief, gold is not an investment; it is speculation. The price of gold merely reflects what others are willing to pay for it at any given moment. It doesn’t produce anything or generate any income. Unlike stocks, gold is the definition of an unproductive asset.
For example, if you invest in a share of Coca-Cola, you’re not just buying a piece of paper – you’re acquiring a real part of the company. Each share represents a claim on Coca-Cola’s assets and earnings.
This means that every time Coca-Cola sells a beverage, part of that revenue contributes to the company’s earnings, from which dividends are paid. With each sale, therefore, you’re earning a small piece of the profits by simply being a shareholder.
This kind of investment ties your returns to the company’s operational success, which over the years has proven robust, as evidenced by Coca-Cola’s impressive track record of increasing dividends for 62 consecutive years. In fact, a single share of Coca-Cola bought in 1919 would be equivalent to 9,216 shares today, thanks to numerous splits.
Gold, on the other hand, remains inert. It doesn’t grow or generate income but sits until you decide to sell it. And selling isn’t free; you must contend with the bid-ask spread (the difference between what you buy the gold for and the price dealers will give for it), which can diminish your returns.
Don’t believe me? Consider the perspective of Warren Buffett, one of the most successful investors alive. In his 2011 shareholder letter, he criticized gold for its lack of utility and inability to produce cash flows:
“Gold … has two significant shortcomings, being neither of much use nor procreative. True, gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.”
The takeaway? Focus on owning productive assets. Invest in profitable large North American businesses that benefit from economies of scale, possess widely used products or services, and return capital to shareholders through dividends or share buybacks.
And be prepared to reap the rewards.
This article originally appeared within the Winter 2025 issue. View the full issue here, or browse all back issues in the CRACKYL Library.
