Financial scam precautions are failing

Fighting financial scams

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Financial scams are on the rise so it's best know how to avoid becoming the victim of a financial scam.

Despite countless warnings, public awareness campaigns, and an ever-growing library of resources on how to avoid financial scams, the number of victims—particularly seniors in Canada—continues to rise.

It's a troubling paradox—we know more than ever about how scams work, yet more people are losing money to them. Clearly, our current precautions aren’t enough. So, why are these protections failing, and what can Canadians do to truly safeguard themselves and their loved ones?

The changing face of financial scams

Financial scams have evolved. Today’s fraudsters are sophisticated, organized, and relentless. They exploit human psychology, social engineering tactics, and current events to create highly convincing narratives. Whether it’s a fake Canada Revenue Agency call, a phishing email from a bank, or a grandparent scam involving a panicked “grandchild” in trouble, modern scams are designed to create urgency, fear, or excitement—causing people to act before they think.

Technology has played a major role in this evolution. Artificial intelligence now enables scammers to mimic voices, generate lifelike videos, or create convincing messages from trusted institutions. Robocalls and spoofed phone numbers make fraudsters seem legitimate. As these tactics become harder to detect, it’s easy to see why even savvy individuals fall victim.

Why current recautions aren’t enough

Most fraud prevention advice boils down to a few common tips: don’t click suspicious links, don’t share personal information, and don’t send money to people you don’t know. While this advice is helpful, it’s often too simplistic or vague—and it assumes a level of tech literacy and confidence that not all Canadians, especially older ones, have.

For seniors, many of whom didn’t grow up with the Internet or smartphones, recognizing a scam can be much harder. Fraudsters know this and often target them specifically. Cognitive decline, loneliness, and unfamiliarity with digital platforms make some older adults particularly vulnerable.

Moreover, scams are increasingly personalized. Criminals may mine social media, data breaches, or online forums to craft custom-tailored attacks. In such cases, standard advice like “don’t trust strangers” falls short—because the scammer may not feel like a stranger at all.

Steps to truly protect yourself and loved ones

To combat these increasingly clever and dangerous scams, Canadians—especially seniors—need more than general advice. They need proactive, practical, and ongoing protections. Here’s what can help:

1. Build a trusted circle of support—Seniors should have one or two trusted people, such as an adult child, financial advisor, or close friend, they can run things by before making financial decisions. Encourage the habit of saying, “Let me talk to someone and get back to you.” Scammers thrive on urgency. Slowing down can make all the difference.

2. Use call and email screening tools—Caller ID spoofing is rampant. Services like Call Control, Hiya or features from your phone provider can help filter out known scam calls. Similarly, enable email filters and spam protections to reduce exposure to phishing.

3. Freeze credit and set up alerts—While Canada doesn’t yet offer full credit freezes like the U.S., you can still place fraud alerts on your credit file through Equifax and TransUnion. Also, set up transaction alerts with your bank and credit cards to receive immediate notifications of any activity.

4. Stay educated together—Scams change all the time. Stay up to date through resources like the Canadian Anti-Fraud Centre. Families should discuss scams regularly, treating it like a “digital fire drill.” Seniors who feel included and informed are more likely to speak up if something seems suspicious.

5. Report and share experiences—Too many victims stay silent out of shame. But reporting scams not only helps law enforcement, it also helps others avoid similar traps. Share experiences with friends, family, or community groups. Fraud loses power when people talk about it openly.

The bottom line is scams are not just a nuisance, they’re a growing threat to financial and emotional well-being. The good news is awareness is only the first step. With the right systems and supports in place and conversations, Canadians can turn the tide and protect themselves more effectively.

The key is not just knowing how to avoid scams but having the confidence and support to act when something doesn’t feel right.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Patriotism not always the best move when it comes to your investments

Patriotism, financial returns

Photo: Castanet file

As the trade war between Canada and the United States drags on, many Canadian investors are understandably uneasy about their exposure to U.S. markets.

Some have already begun shifting their portfolios away from U.S. stocks, opting instead for what feels like a safer, more patriotic move—investing in Canadian companies. But while this instinct may feel right, it could be doing long-term damage to their financial futures.

The persistent problem of home bias

Home bias, the tendency for investors to favour domestic assets, has long been a challenge for Canadians. In fact, the average Canadian investor held a disproportionately high percentage of Canadian equities in their portfolios before the trade war, often at the expense of global diversification. According to various studies and industry data, it's not uncommon for Canadian portfolios to have 50 per cent or more allocated to domestic equities, even though Canadian stocks represent only about three per cent of the global equity market.

This home bias has already had consequences. Over the past decade, the S&P 500, an index tracking 500 of the largest publicly traded companies in the U.S., has returned approximately 12 per cent annually (as of the end of 2024). Compare that to the S&P/TSX Composite Index, Canada’s benchmark, which has delivered closer to five per cent annually over the same period. That performance gap may not seem enormous in a single year, but compounded over a decade or more, it can significantly erode an investor’s retirement nest egg.

The hidden concentration risk

What makes the situation even more problematic is that Canadians are not just heavily invested in Canadian equities. Many also hold substantial business and real estate assets, whether it’s their principal residence, a vacation property, or small- and medium-sized businesses. These assets are all tied to the Canadian economy, which itself has underperformed relative to global peers.

Canada’s GDP growth averaged just over 1.6 per cent annually from 2013 to 2023, compared to approximately 2.2 per cent in the United States and even higher growth in emerging markets like India and parts of Southeast Asia. That means Canadians are often doubly exposed—their investment portfolios and their other assets are heavily reliant on a relatively sluggish domestic economy.

The trade war temptation

In the context of the current trade war with the U.S., the temptation to pull back from American investments is understandable. The uncertainty around tariffs, political rhetoric and diplomatic tensions creates a fear-driven environment. But making long-term investment decisions based on short-term headlines is rarely a wise move.

History has shown that global diversification is one of the best ways to manage risk and enhance returns over time. The U.S. market continues to be home to many of the world’s most innovative and profitable companies. Likewise, emerging markets offer growth potential that simply doesn’t exist in a mature economy like Canada’s. Completely abandoning or underweighting these opportunities can significantly hamper portfolio performance.

Separate emotion from investment decisions

Investing is inherently emotional. We want to feel safe. We want to support our home country. And during periods of uncertainty—especially involving national pride or political conflict—those emotional instincts become even stronger. But successful investing requires discipline and objectivity.

Allowing emotion to dictate your asset allocation can lead to costly mistakes, including excessive concentration in underperforming markets and missed opportunities abroad.

The best course of action? Stay diversified, remain invested and work with a professional financial planner who can help you navigate geopolitical noise without sacrificing your long-term goals.

The trade war may pass but the consequences of a poorly diversified portfolio can linger for decades.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Financial misconceptions that can lead to costly mistakes

Financial myth busting

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Canadians are facing a turbulent economic landscape marked by persistent inflation and the growing impact of tariffs.

Unfortunately, these financial pressures (and a lot of misinformation) have given rise to common money myths that, if believed, could lead to costly mistakes.

Let’s debunk some of the most prevalent financial misconceptions circulating right now and provide guidance on what you should (and shouldn’t) do to protect your financial well-being.

Myth No. 1: Keeping cash is safer than investing during economic uncertainty

Reality: While having an emergency fund in cash is crucial, hoarding excess money in a savings account can be detrimental during high inflation periods. Inflation erodes purchasing power, meaning money sitting in a low-interest account loses value over time.

What to do instead: Balance liquidity with smart investing. Consider diversifying a portion of your savings into assets that historically outpace inflation, such as equities, inflation-protected bonds or real assets like real estate. Even conservative investments can help maintain purchasing power over time.

Myth No. 2: The stock market is too risky right now—Better to wait until things stabilize

Reality: Market volatility is a normal part of investing. Trying to time the market often results in missed opportunities, as some of the biggest market gains happen during periods of recovery.

What to do instead: Stick to a long-term investment plan that aligns with your risk tolerance and goals. Consider dollar-cost averaging (investing a fixed amount at regular intervals) to mitigate risk and take advantage of market fluctuations.

Myth No. 3: Rising interest rates mean it’s time to pay off all debt immediately

Reality: Not all debt is bad debt. While high-interest consumer debt should be prioritized for repayment, low-interest debt, such as a mortgage or student loans, can still be managed strategically.

What to do instead: Focus on paying down high-interest credit card balances and variable-rate loans. However, if you have a fixed-rate mortgage at a low rate, you may be better off investing excess funds rather than making aggressive extra payments.

Myth No. 4: Canada’s inflation and tariffs will automatically lead to a recession

Reality: While economic uncertainty exists, global economies are resilient. Inflation and tariffs can contribute to slower growth, but they don’t necessarily signal an inevitable recession.

What to do instead: Avoid panic-driven financial decisions. Keep a diversified portfolio, maintain a strong emergency fund, and adapt your budget to rising costs while continuing to invest in long-term wealth-building strategies.

Myth No.5: The housing market is going to crash, so it’s better to wait to buy a home

Reality: While housing markets have cooled in some regions, a full-scale crash is not guaranteed. In fact, continued demand and supply shortages may keep prices from falling as much as some expect.

What to do instead: If you’re looking to buy a home, focus on affordability rather than timing the market. Ensure your finances are in order, interest rates fit your budget and your purchase is based on long-term stability rather than speculative price changes.

Myth No. 6: Inflation means you should stop contributing to retirement accounts

Reality: Inflation does increase the cost of living, but stopping retirement contributions can have severe long-term consequences due to lost compound growth.

What to do instead: Even small contributions to RRSPs, TFSAs, and employer-sponsored pension plans can add up over time. If possible, increase contributions to keep up with inflation and maintain your future purchasing power.

Myth No. 7: Tariffs on goods mean you should stockpile now before prices skyrocket

Reality: While tariffs can lead to price increases on certain goods, panic-buying often results in overspending and waste.

What to do instead: Be strategic about purchases. Stock up on non-perishable essentials if there’s a clear price increase coming but avoid hoarding items you don’t truly need. Compare prices and consider alternative brands or locally produced goods to mitigate cost increases.

During times of economic uncertainty, it’s easy to fall for financial myths that can do more harm than good. The key to navigating inflation and tariff challenges is staying informed, making rational financial decisions, and focusing on long-term stability rather than short-term fear.

By busting these myths and adopting smart financial strategies, Canadians can protect their wealth and future financial security.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Interest rate cuts can be a mixed blessing

Impact of interest rate cuts

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Earlier this month, the Bank of Canada announced its seventh consecutive interest rate cut since it began lowering rates in June 2024.

These rate cuts were widely expected as inflation continues to cool and economic growth shows signs of slowing.

While lower interest rates are welcome news for Canadians carrying mortgages and other debt, they present significant challenges for savers and retirees who rely on interest income.

The good news for borrowers is interest rate cuts are designed to stimulate economic activity by making borrowing cheaper and encouraging spending and investment. For Canadians with variable-rate mortgages, lines of credit or other forms of debt, lower rates mean reduced monthly payments and improved cash flow.

For example, a homeowner with a $500,000 variable-rate mortgage at five per cent interest would have been paying approximately $2,900 a month in principal and interest. If rates drop by one per cent, that monthly payment could decrease to around $2,650—a savings of $250 per month or $3,000 per year. These savings can provide much-needed relief for families feeling the pressure of high living costs and stagnant wage growth.

Lower rates also make it more affordable for prospective homebuyers to qualify for a mortgage, potentially giving the real estate market a boost. Additionally, those with outstanding personal loans, car loans, and credit card balances tied to the prime rate will see a reduction in their interest payments.

Tougher times for savers and retirees

While rate cuts are great news for borrowers, they are not as positive for Canadians who rely on savings and fixed-income investments to fund their retirement. Lower interest rates mean lower returns on savings accounts, guaranteed investment certificates (GICs), and bonds.

Retirees who have been counting on conservative investments to generate income may now find themselves facing shrinking returns. For example, a retiree with $500,000 invested in GICs earning four per cent would have been earning $20,000 annually. If rates drop to two per cent, that income would be cut in half to $10,000 per year.

Many retirement income strategies are built around the assumption that fixed-income products will provide reliable and predictable cash flow. When rates drop, retirees may have to draw down their capital more quickly than expected or shift to higher-risk investments to maintain their income levels.

Strategies to offset the impact of falling rates

While retirees and savers can't control interest rates, they can adjust their financial strategies to minimize the impact of lower returns:

1. Diversify beyond fixed income - Retirees may need to look beyond traditional fixed-income products and explore dividend-paying stocks and balanced mutual funds or ETFs. These investment options can potentially provide a steady stream of income while offering potential for capital appreciation as well.

2. Ladder GICs and bonds - A GIC ladder involves spreading investments across multiple GIC terms (e.g., one-year, three-year, and five-year terms). This approach allows investors to benefit from higher rates when they become available while maintaining liquidity and some protection from rate declines.

3. Consider annuities - Annuities provide guaranteed income for life or a fixed period, which can help stabilize cash flow in retirement. However, with lower rates, the payout rates on annuities may not be as attractive—so it’s important to carefully compare options.

4. Shift to a total return strategy - Instead of focusing solely on income generation, retirees could consider a total return strategy that combines capital gains, dividends, and interest. This approach may involve increasing exposure to a mix of stocks and bonds to generate a more balanced return over time.

5. Delay RRSP withdrawals - If possible, retirees can delay withdrawals from their Registered Retirement Savings Plans (RRSPs) to allow their investments more time to grow. This strategy also allows them to take advantage of higher withdrawal limits and lower tax rates in later years.

6. Use a Home Equity Line of Credit (HELOC) strategically - For retirees with significant home equity, a HELOC can provide a low-cost borrowing option to cover short-term expenses or to supplement income during market downturns.

Balancing borrowing and saving in a low-rate environment

The Bank of Canada’s rate-cutting cycle reflects efforts to stimulate the economy and control inflation. While borrowers stand to benefit from lower interest costs, savers and retirees face a different reality—one where generating sufficient income becomes more difficult.

Retirees and those nearing retirement need to be proactive in adjusting their financial plans. Diversification, strategic withdrawal planning, and exploring alternative income sources can help offset the impact of falling rates. Working with a professional financial planner to adjust asset allocation and explore new income-generating strategies can make a significant difference in maintaining financial security through retirement.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.