Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

5 ways Scammers are Targeting your Bank Account

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By Devin Partida

Special to Financial Independence Hub

Scammers use various tactics to target victims’ financial data today, ranging from malware to fake giveaways.

People can protect themselves and their data online by understanding the risks at play.

Here are the top five bank account scams everyone should know about:

1. Phishing Emails and Texts

Phishing is one of the most common tactics scammers use to target victims’ bank accounts. Reported phishing attacks rose 61% in 2021, surpassing 1 million incidents worldwide. These attacks use deceptive messages to trick victims into giving away personal information, frequently including banking data.

Phishing messages most often come in the form of emails or texts. Scammers write the messages so they appear to be coming from a bank or credit card company. Usually, there is some urgent emergency in the phishing message that demands an immediate response from the victim. For instance, a phishing text might warn a victim that money was removed from their account.

This tactic aims to scare victims into panicking and responding to the message right away. Despite the urgency of messages like this, people must always contact their bank or credit card company directly to ask about the message before responding. This might take some time, but it ensures that phishing attacks fail to harvest sensitive banking information.

2. Online Shopping Scams

Online shopping scams are becoming more popular today, and they can be tricky to spot. These scams involve online stores collecting users’ bank account information in the background. They may or may not fulfill orders and can sell any kind of products. However, it is usually a sign that a store is a scam if an order is not fulfilled.

Online shopping scams often feature very cheap products. If something looks like a good deal, unsuspecting victims are more likely to fall for the scam. The store website may function smoothly and look like any other shopping website. A lack of customer service is a key giveaway that a store is probably a scam.

3. Fake Fraud Alerts

Fake fraud alerts are a specific type of phishing scam that leverages victims’ preexisting fear of data and identity theft. These dangerous fake messages are disguised as fraud alerts and may even specify the victim’s bank or credit card company.

A great example is the “account takeover” scam, which takes over a victim’s account by getting them to respond to a fraudulent account takeover alert. Like a self-fulfilling prophecy, once the victim responds to the fake message, they give the scammer the data they need to take over the victim’s account.

Luckily, there are a few ways to spot this kind of scam. If the message asks the victim to share personal information, it is most likely fraudulent. No bank or credit card company will request personal information via email, text or unsolicited calls.

Victims of this type of scam should check their bank or credit card activity directly, as well. Checking will usually reveal that no one withdrew money or accessed their account without permission.

4. Award, Prize, Giveaway and Lottery Scams

One type of bank account scam on the rise is fake awards, prizes, giveaways and lottery announcements. These scams often appear as emails and text messages but can also pop up as ads online. For example, YouTuber MrBeast has warned fans of a widespread scam impersonating him and claiming to give away free money.

This type of scam will usually ask victims to pay a “shipping” or “processing” fee or request bank details for transferring the prize money. After the victim gives this information or makes a payment, they never hear from the scammer again and don’t get any prize or money. Continue Reading…

Long-term Financial Concerns when moving to a New Region

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Image Source: Unsplash

By Beau Peters

Special to Financial Independence Hub

There are many reasons that people may move to a new state or province, including job opportunities, a change of pace, or wanting to be closer to family. However, one of the major factors in relocating is that where they currently live is more expensive than where they could be.

It’s easy to live in the now and make a drastic change because you believe the grass is greener on the other side, but you must also prepare for the future, and be aware of how your finances could be impacted when you move across state lines. Here are a few long-term financial implications you’ll want to keep in mind before you go.

Cost of Living

Some people move to another state because they like the weather or have friends they want to be closer to, but they’re shocked when they realize that the price of living is exponentially higher than the place they left. Some states have higher prices for the things we buy most, and the costs will likely stay that way for the foreseeable future.

We’re not just talking about the price of milk or groceries either. Costs can vary for many products and services, including healthcare, utilities, gasoline, etc. Before you relocated, research how the costs will affect you personally. You may want to reconsider if you know you’ll have a long commute to work and discover that you’d be paying 50 cents more per gallon of gas. Search online for a cost comparison calculator, which you can use to research the potential costs and make an educated decision.

Sometimes you must move for non-negotiable reasons, such as job opportunities or to be closer to family. If that’s the case and you know that the new state will be more expensive, then you may need to make some adjustments now to reduce costs — especially if you’re moving with young children. Though the actual process of moving with young kids can be difficult, there are ways to mitigate those challenges before, during, and after the move. Mapping out the route you plan to take ahead of time and arranging for childcare the day of the move are both ways to reduce stress during your relocation.

However, beyond the move itself, you have to be prepared for higher costs while raising your children, which may mean dealing with more expensive childcare, healthcare, and school expenses for years to come. These expenses shouldn’t necessarily prevent you from moving, but you should take them into account to ensure you’re making the right decision for your family and finances.

Taxes will be Different

Many people get excited because they hear that the cost of living is less in another state, but they often forget how taxes come into play.

One talking point that gets a lot of folks fired up is when a state doesn’t have an income tax. That’s the case in nine U.S. states, including Florida, Nevada, and Washington. However, you may not save as much money as expected because the states need to make that money up somehow. They often do so by charging more for sales, property, and estate taxes. If you buy a home, the property taxes can be a significant shock every year, so do your research. Continue Reading…

Vanguard Home Bias study says Canadians should raise global stock exposure to 70%

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Vanguard Canada has released an interesting study on home country bias around the world, and makes the familiar case that most Canadian investors are woefully overweight Canadian equities and underweight the rest of the world. You can find the full report (PDF), by clicking here.

The report is written by Bilal Hasanjee, CFA®, MBA, MSc Finance, Senior Investment Strategist for Vanguard Investments Canada. He points out that Canadian stocks account for only 3.4% of the total global stock market as of June 30, 2022, but as the chart to the left shows, the average Canadian investor is more than 50% in domestic (Canadian) equities. That’s a whopping overweight position of 15 times!

“There are good reasons to have some overweight to Canada for domestic investors, including future return differentials, preference for the familiar, favourable tax considerations, the need to hedge domestic liabilities and currency risk,” writes Hasanjee, “However, Vanguard believes the optimal asset allocation for Canadian investors is 30% vs 70% allocation to Canadian versus international equities, based on our research …”

In other words, it’s okay to be overweight Canada by a factor of nine (30% versus 3.4) but most of us still need to boost our foreign content by roughly 50%: from 47.8% to 70%.

Home Country bias is hardly unique to Canada

Home country bias is hardly unique to Canada, the report says: it’s certainly the case in the United States and many developed countries, as Figure 2 demonstrates:

Americans are also overweight their home market —  the United States — but they can get away with it, as more than half the global market capitalization is in American stocks, plus many of those are blue-chip corporations that have the world as their market. If anything, Interestingly you can see from the above that Australia, which is similar to the Canadian stock market in being focused mostly on energy/resources and financials, suffers even more than Canada from home country bias. Continue Reading…

Approach the A.I. bandwagon with caution

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Pexels: Cottonbro Studio

It’s hard to pick up a financial publication or peruse most general-interest media outlets these days without being blitzed by stories about ChatGPT and the latest mania: A.I. or Artificial Intelligence.

Just last week the New York Times devoted an episode of its The Daily podcast to Silicon Valley’s rush to A.I., even as venture capitalists start shying away with the previous darling, Cryptocurrency.

It seems everyone wants a piece of what they hope will become the next Nvidia, a chip play that pundit Jim Cramer once named after his own dog. Give him credit: anyone who bought before Nvidia famously passed the US$1 trillion market cap level this year is probably sitting on a double or triple, including Yours Truly.

In a recent video interview I did with Allan Small, I mentioned in passing that while I do happen to own Nvidia going back some years, I also have my share of painful losers, and that my approach to A.I. and technology in general is that it should merely be part of a normal diversified portfolio. I told him that I’ve always had a reasonable exposure to technology, seeing as I was the Globe & Mail’s technology reporter going back to the early 1980s (perhaps one of the first to specialize in that beat.)

A.I.-themed ETFs

Speaking of the Globe, I see that its personal finance columnist Rob Carrick recently weighed in with his take on A.I. You can find it (under paywall) here. For those who can’t get past the paywall, Carrick lists some examples of A.I.-themed ETFs, adding the hedge “if you’re comfortable with the risk of a more direct approach to AI investing.”

One is an ETF I happened to take a flyer on myself a few years ago, so far under water: the Global X Robotics & Artificial Intelligence ETF (BOTZ-Q; the others include the iShares Robotics and Artificial Intelligence Multisector ETF (IRBO-A) and the First Trust Nasdaq Artificial intelligence ETF (ROBT-Q.) Carrick also mentions a few other Canadian-listed ETFs with the most exposure to AI produced by TD Securities: I’ll just list the suppliers and ticker symbols here: two from Horizons ETFs (RBOT-T and MTAV-T), two from Evolve (TECH-T and DATA-T), and one from BMO: ZINT-T.

Personally, I doubt I’ll buy any of these theme ETFs. Investors typically get burned by the FOMO and elevated valuations inherent on jumping on a thematic bandwagon once the train has already left the station [to mix a metaphor] and embraced widely by the media. The most prominent example will be marijuana ETFs, which have generated little but painful losses for most investors, even those early to the party. More recently are cryptocurrencies, whether obscure individual holdings or packaged up in ETFs (led by Canada!) Continue Reading…

Using ETFs for International Investing

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Image from Pexels/Anton Uniqueton

By Erin Allen, VP, Online Distribution, BMO ETFs

(Sponsor Content)

As an investor, diversification is crucial to reducing risk and achieving long-term growth. International investing is a great way to diversify your portfolio, but it can be challenging for Canadians to navigate the complex world of foreign stocks and currencies. One solution is to use exchange-traded funds (ETFs) for international investing.

Benefits

There are many advantages to using ETFs for international investing. First, they provide exposure to a broad range of international markets, including developed and emerging markets. This diversification can help reduce risk (when one market zigs and another zags) and increase returns over the long term.

Second, ETFs are typically more cost-effective than other forms of international investing. They have lower fees than traditional mutual funds, and you can invest in them for no commission at many online brokerages in Canada.

Third, ETFs provide transparency and ease of access. You can easily track the performance of your international ETFs and adjust your portfolio as needed. Additionally, most ETFs are denominated in Canadian dollars, so you don’t have to worry about currency conversion fees or fluctuations.

Considerations

  • Currency: Currency returns are an important factor impacting investors purchasing a non-Canadian asset. Foreign currency fluctuations can affect the total return of assets bought in that currency when compared to the Canadian dollar. ETF providers offer both hedged and unhedged options, giving Canadian investors more tools to efficiently execute their investment strategies. The objective of currency hedging is to remove the effects of foreign exchange movements, giving Canadian investors a return that approximates the return of the local market. Continue Reading…