As the cost of living continues to rise across Canada, many people are looking at ways to make extra income. Although working multiple jobs is a common solution, there are also less legitimate options that might seem tempting – especially if you’re struggling financially.
Countless online digital investment opportunities promise high returns with little risk. Unfortunately, many Canadians overlook the importance of thoroughly researching these investments. This lack of due diligence can lead to significant financial losses, as many of these opportunities are high-risk or outright scams.
Be wary of these popular online digital investments.
Cryptocurrency
Cryptocurrencies, including the popular Bitcoin, are digital currencies that use cryptography – a method to code messages – to secure transactions. Cryptocurrency investors use their crypto to make digital payments without a central government or bank.
Unlike stocks and bonds, cryptocurrencies aren’t financial securities. They don’t represent a value and can’t be traded on public markets.
Crypto is a volatile asset, and its prices usually change quickly. Investors must be ready for significant price swings and be comfortable knowing that recovery can take months or years. Sometimes, investments may experience a sharp decline before they eventually recover, but other times, recovery never occurs. Any cryptocurrency could drop to zero or near zero after a massive sell-off.
Even with careful selection of certain cryptocurrency investments, success is not a guarantee. Sure, your brother’s friend’s neighbour may have made a ton of money buying and selling Bitcoin, but this is rare. They likely came into a bit of luck buying and selling at the right time. As the old adage goes, you can’t time the market.
Ultimately, don’t let FOMO take over your rational thinking. Tread carefully.
Online Trading
The accessibility and convenience of online trading platforms make it easy for Canadians to buy and sell assets from anywhere.
Through a web-based or mobile app, you can easily trade securities such as stocks, bonds, ETFs and derivatives to build wealth. However, more often than not, that aim remains just a hope and doesn’t always materialize.
More than 70 per cent of do-it-yourself (DIY) investors lose money when investing. Often, this is because they’re overconfident, lack a solid investment strategy, and practise a herd mentality. Due to familiarity with certain assets or limited means to diversify, DIY investors might concentrate their portfolios too much. And when losses occur, they often struggle to remain emotionally detached.
Given the unpredictability of the markets, it’s crucial to seek solid investment advice rather than try to invest on your own. You must thoroughly understand the characteristics of the investments you’re considering purchasing and perform appropriate financial and economic analyses.
Even then, you should prepare for a typical long-term investment horizon. While you’re waiting, know there’s always the chance you could lose all or part of the value of your investment. Unless you want to do day trading, don’t scramble to sell every time you see your stock dip, and conversely, don’t jump on the bandwagon of a trending stock that’s overhyped.
Time in the market outperforms timing the market – always.
Online Scams
The internet’s ability to instantly answer online queries has undoubtedly transformed our lives. But unfortunately, at the same time, it has also introduced a new concern: online scams.
According to the Canadian Anti-Fraud Centre, investment fraud is rising exponentially. In 2022, Canadians reported losses of $308.6M to investment fraud, up from $164M the year before. Since only 5-10 per cent of people actually report fraud, the numbers are likely much higher.
At SolveYourDebts.com, we’re seeing more and more clients fall victim to fraud. They’re promised online investment opportunities that exceed what the market is offering, and when they want to get their investment back, they are told they need pay more money. In the end, many are just giving up on ever getting their money back.
But investment scams aren’t the only fraud we must be aware of online. Romance scams and spear phishing are two other popular frauds with the highest reported victim losses.
In romance scams, a scammer builds trust with a victim through a romantic relationship, which they eventually use to extract money. Spear phishing uses personalized emails to entice recipients into sending money or revealing confidential information.
But there are countless other scams to be aware of, too – with new ones popping up frequently, including:
- Job offer scams that promise work that will pay you more (via check or money order) than your ‘job offer’ states,
- Lottery scams, which claim you’ve won a substantial payout but need to pay a fee first, and
- Online purchase scams, which occur when online shoppers make purchases through fake e-commerce stores.
Scammers are clever, often using new technology and emotions around major events to reach their victims. As an internet user, you must stay one step ahead to keep your personal information and money safe.
The Bottom Line About Digital Investment Opportunities
As much as we may keep searching for it, there really is no get-rich-quick scheme. Instead, the best way to get ahead financially is by practising healthy financial management habits, which include:
- Paying off debt,
- Establishing good credit
- Making (and following) a budget
- Saving for emergencies and retirement
- Knowing when to seek professional financial help
If you’re currently struggling to pay bills and are worried about your financial future, we can help. Our debt solutions and credit counselling professionals prioritize your best interests and are committed to helping you avoid bankruptcy whenever we can.
Contact us today to arrange a free consultation to learn more about our services.
