Monthly Archives: May 2015

Avoiding Investment Scams

We have covered credit card fraud before on this blog, and in this article we return to a similar theme. According to the 2012 CSA Investor Index, 27% of Canadians believe that they have been targeted for investment fraud at some point during their lives. Worse still, 4.6% of Canadians believe that they have been the victim of investment fraud. Over half of those affected lost their entire investment, and most of the remainder lost over half. Seniors should be especially careful. Fraudsters love to target the elderly, hoping to find easily-confused seniors with big, juicy retirement funds. With the help of these tips, they will find well-informed, appropriately suspicious investors instead.

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Don’t let yourself be rushed. Scammers love to use “limited-time offers” or hot deals that will go away forever if you don’t act now. They want you to act before you can think, and especially before you can research their credentials. Often, fraudsters will claim to have secret information that will make you a lot of money if you can exploit it before it becomes public knowledge. Reputable advisors will give you a chance to think over an investment opportunity.

Ask questions. Fraudsters try to target the uninformed and avoid savvy investors: the rate of return from pitching to the well-informed just isn’t worth it. Asking questions can be enough on its own to make a fraudster back off. In particular, ask for the investment prospectus. If there isn’t one, don’t invest. If you don’t understand the product, don’t sign anything. Reputable advisors will be happy to talk you through an investment.

Check credentials. Fraudsters will look and sound convincing. If they didn’t, they wouldn’t make money. Before investing with any advisor, do a background check. CSA/ACVM provides free online tools for checking your advisor’s credentials. You can also see if they have ever been disciplined by an industry body or a provincial securities commission. Needless to say, any disciplinary history that isn’t as pure as the driven snow is a red flag. Ideally, you should only work with an advisor who is a member of a self-regulatory organisation within the industry, like the MFDA or IIROC. Check the credentials of the investment product itself, too. Products that aren’t scams are usually registered with a provincial securities commission. To find out if this one is, call your securities commission and see if they have ever heard of it.

Beware of high guaranteed returns. Unfortunately, it is difficult to get a high return on your investments. A boring but safe savings account is likely to have an interest rate of about 1%. There are plenty of perfectly legitimate investments out there with a higher return, but they tend to carry a correspondingly higher level of risk. An ordinary, diversified investment portfolio might carry an annual return of, say, 5%, and some of the investments will be calculated risks. A guaranteed rate of return of 10%, then, is almost certainly a scam.

Just because your friend made money, doesn’t mean you will. See above: a high guaranteed return is a gigantic red flag. According to the CSA Investor Index referenced earlier, 12% of fraud attempts are affinity frauds: the target is introduced to the fraudster by a friend or relative. Furthermore, some common investment frauds like the Ponzi Scheme really do pay out to some of the early investors. Your friend might have made a whole pile of money, but that doesn’t mean that you aren’t being played. Pay attention for the other warning signs listed here.

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Report your suspicions. The more fraudsters that end up in jail, the rarer investment fraud will become. If you believe that you have been targeted by an investment fraudster, report it! Fraud reporting systems vary from province to province, but a good place to start is your province’s Securities Commission. You should also contact your local police department or the RCMP.

Energy Efficiency

We discussed a few long-term energy saving options in our guide to winter on a budget, but what do you do for the rest of the year? You have options beyond fitting curtains and new insulation. In this article, we’ll look at ways to be more energy efficient in the home, saving you potentially hundreds or even thousands of dollars every year. That is a lot of money that can go into your retirement fund or your stock portfolio.

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Lighting Up Your Life

As of the start of 2015, ordinary 40- and 60-watt incandescent light bulbs can no longer be manufactured in or imported into Canada, an extension of the ban on 75- and 100-watt bulbs that began at the start of 2014. Consumers can still get hold of rough service incandescent bulbs, and they remain available for more specialised uses: lamps, refrigerator door lights, and so on. Retailers are also allowed to sell off their remaining stock, they just can’t bring in more. Existing stock is expected to last until around the end of March. Don’t rush off to stockpile bulbs just yet, though. Energy-saving compact fluorescent lamp bulbs cost more up front than the old incandescent bulbs, but they last a lot longer and can use up to three quarters less energy.

For a more extreme option, LED light bulbs have all the advantages of CFLs, but more so. They also cost even more. The sticker price for even a cheap LED light bulb is usually over $10. However, an LED bulb can last decades without replacement, and they use even less energy than a CFL. Furthermore, their prices continue to fall as they are adopted more widely by consumers.

Lean, Green Appliances

For further savings on your hydro bill, look for the most efficient appliances. Promoted and administered by Natural Resources Canada, the ENERGY STAR certification is the mark of high-efficiency products in Canada. Products with the ENERGY STAR sticker are usually in the top 15% to 30% of their class for energy efficiency. For an even better guarantee of energy efficiency, look for the ENERGY STAR Most Efficiency designation, awarded to most energy efficient products in each class for the current year. Look for complete lists of ENERGY STAR certified products on the Natural Resources Canada website.

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If the product you are looking at buying isn’t ENERGY STAR certified, they also publish EnerGuide information for products. You can find an EnerGuide label on many new appliances: it is mandatory for clothes washers and dryers; dishwashers, refrigerators and freezers (including combined models); wine chillers; electric ranges, cooktops and ovens; and room air conditioners. It is voluntary for things like furnaces and water heaters, but many manufacturers like to advertise their products’ energy efficiency. Buying the absolute most efficient product might always not save you money, but the energy cost is a huge part of the lifetime cost of a new appliance. When put in lifetime terms, you can really start to see the savings. Natural Resources Canada has a good calculator.

Turn It Off

Many modern electronics have a standby mode. Even when they are turned off, they continue to draw electricity so long as they are plugged in to power quick start functions, remote signal receivers, battery chargers and so on. Standby modes are a lot more efficient than just leaving the gadget switched on, but you’re still paying for electricity. In fact, Natural Resources Canada estimates that 5 to 10 percent of electricity use in Canadian homes comes from standby modes.

To reduce the power drawn by standby modes, use a watt meter to figure out which products are drawing the most power. Battery chargers for laptops and phones are especially standby-heavy, because they continue to draw power even when the battery is full. Looking for products with an energy efficient standby mode is one option, but probably the easiest way to save yourself from phantom power draw is to use ordinary power bars. Plug your products into a power bar instead of directly into the wall, and then turn off the power bar when they aren’t in use. You won’t get your standby mode features, but you also won’t be paying to power your gadget for the eight or more hours a day that you aren’t using it.