Main Content
Agency Main Banner Content
Welcome to MoneyWise Matters
MoneyWise Matters is a bi-weekly blog published every other Wednesday by the Office of the Indiana Secretary of State. Here we discuss money related topics including; debt reduction, budgeting, saving strategies, scam alerts, investment fraud prevention and investor insights. You don’t want to miss out on this helpful information, hit subscribe for email updates (above) so you’ll be notified when we publish a new post.
Please note that the statements made in the posts are solely the opinions of the writer and do not represent the opinion and/or position of the Indiana Securities Division. The Division assumes no responsibility for the content presented by the authors.
Modern Money: New Investing in 2020
Modern Money: New Investing in 2020
By Kelly Griese
Wednesday, February 17, 2021
Recently, we read a fascinating study from the Financial Industry Regulatory Authority (FINRA) about the investing habits of young people and how those habits compare to older, more established investors. The full study is linked below, and we encourage you to read it. But for those who want an overview of the results, you’re in luck! We convinced the folks at FINRA to write a guest blog post for MoneyWise Matters.
Investing 2020: New Accounts and The People Who Opened them
During 2020, the COVID-19 pandemic and associated market and income volatility dramatically altered the financial well-being of many U.S. households. Nevertheless, a surge of new retail investors flocked to the market, opening taxable investment accounts. So, who are these newcomers? Media coverage can be filled with speculation about the characteristics and habits of new investors.
To cut through the opinions, the FINRA Foundation partnered with NORC at the University of Chicago on a rigorous research study to get some real answers.
The study grouped investors into one of the following categories:
- New Investors who opened taxable investment account(s) in 2020 but had not previously done so
- Experienced Entrants who opened new investment account(s) in 2020
- Holdover Account Owners who kept their existing account(s) opened before 2020 but did not open any new ones.
Who are the New Investors?
They are young. New Investors were younger than experienced investors. Nearly two-thirds were under age 45. The plurality of both New Investors and Experienced Entrants were between 30 and 44 years old. In comparison, the largest portion of Holdover Account Owners were over 60 years old.
They are racially and ethnically diverse. While most investors (of any investment group) were white, New Investors were more diverse. New Investors had the highest proportion of African American investors. There were more Hispanic/Latino investors in both the New Investors and Experienced Entrants segments. Holdover Account Owners had the smallest proportion of African American or Hispanic/Latino respondents.
Their incomes are not high, and their account balances reflect it. New Investors earned less income than their more experienced counterparts. While across all investors the plurality earned $100,000 or more annually, only 28 percent of New Investors earned that amount. In addition, almost a quarter of New Investors earned less than $35,000 annually. In comparison, only 7 percent of Holdover Account Owners and 16 percent of Experienced Entrants reported earning less than $35,000 annually. New Investors also generally held much smaller account balances. Thirty-three percent of New Investors held account balances of less than $500, while only 16 percent of Experienced Entrants and 6 percent of Holdover Account Owners held account balances of this amount. Nearly half (46 percent) of Holdover Account Holders had account balances exceeding $25,000.
Why did they open an account?
It’s fun. Overall, most investors reported that they liked investing. Sixty-one percent of New Investors agreed with the statement “I enjoy investing” as did 72 percent of Experienced Entrants. Holdovers were least likely to report that they enjoyed investing, with 54 percent at least somewhat agreeing with the statement.
But really…why? When asked to report on what prompted them to open a new investment account, New Investors reported being motivated by the ability to invest a small amount of money and the dips in the market that made stocks cheaper to buy. Experienced Entrants had similar top reasons, though they differed slightly. Investing for a goal other than retirement, and the ability to invest small amounts made up some of the top reasons for Experienced Entrants. Despite our focus on investing in taxable accounts, those who opened accounts in 2020 most frequently cited saving for retirement as a top reason.
There were also some key differences in investors’ goals by race and ethnicity. Among white and Asian investors, the most cited reason for opening a new investment account in 2020 was saving for retirement, but among African American and Hispanic/Latino investors, the top reason was the ability to invest with small amounts of money.
They have investment goals. The future goals of investors aligned somewhat with why they opened an account in the first place. Across all investors, the most common goal that was cited for their taxable investment was “saving for retirement.” For New Investors, the second-most common goal was learning about investing, while for Experienced Entrants it was speculating, or making fast profits, to build wealth. For Holdover Account Owners, the second-most frequently cited goal was saving for an upcoming expense other than retirement.
They don’t report taking high risks. While there is media coverage suggesting that New Investors are prone to taking high risks, our findings indicated that New Investors (like the other segments) were most likely to report taking average financial risks, expecting average returns. Forty percent of New Investors reported a willingness to take substantial or above-average financial risks (expecting returns that were substantial or above-average), which is lower than that reported by Experienced Entrants or Holdover Account Owners, but still sizeable.
What are their investment habits?
They trade more frequently. Investors who opened accounts in 2020 traded more frequently than Holdover Account Owners. Sixty-one percent of New Investors and 62 percent of Experienced Entrants reported at least one trade per month.
They mostly trade individual company stocks. Roughly two-thirds of both New Investors and Experienced Entrants reported trading individual company stocks, the most frequently traded type of investment. Stocks were followed by mutual funds and exchange-traded funds (ETFs), but at much lower levels. Only about one-third of New Investors and Experienced Entrants reported trading these funds. New Investors’ high use of company stocks suggests a disconnect between the risk they reported being willing to take and the amount of risk they are actually taking. Individual company stocks can carry a high level of risk, typically more so than a well-diversified mutual fund, for example.
Many are unclear about what their accounts offer. Most New Investors (and Experienced Entrants) reported that their account offered commission-free trades, but over one-third of New Investors and nearly a quarter of Experienced Entrants reported not knowing whether they were paying commission on trades. Similarly, most New Investors and a plurality of Experienced Entrants did not know whether their account allowed them to make purchases on margin. Of those reporting a margin account, only about one-quarter reported actually using margin to purchase investments. While they were more certain about whether they had traded options, only 16 percent of New Investors and 29 percent of Experienced Entrants reported ever having done so.
They access their accounts online. An overwhelming majority of investors used the internet to access their accounts. Nearly half of New Investors reported accessing their accounts primarily via mobile app, while three-quarters of Holdover Account Owners reported accessing their account primarily through a computer. Experienced Entrants were more divided, with 40 percent accessing via mobile app and 54 percent accessing primarily through a website.
They seek advice from people who aren’t financial professionals. While nearly half of Holdover Account Owners relied on information from financial professionals for making investment decisions, only 23 percent of New Investors and 39 percent of Experienced Entrants did so. Instead, New Investors tended to seek information from friends, colleagues, and other family members (38 percent), while Experienced Entrants often reported they preferred doing “other personal research” (42 percent). Both New Investors and Experienced Entrants reported seeking information from the company in which they planned to invest (37 and 42 percent, respectively). Regulators were the least often used information source across the three investor segments.
How much (little) do they know about investing?
Many don’t know a lot. The objective investment knowledge of new investors, measured through a 5-question quiz, was very low. On average, New Investors could answer only 1.4 out of five questions correctly. In comparison, Experienced Entrants were able to correctly answer 2.3 out of five, and Holdover Account Owners 1.8 out of five.
But they don’t seem to realize it. When asked to assess their overall investment knowledge, New Investors reported considerably high levels of confidence relative to their objective knowledge. Sixty-two percent of New Investors reported a level of investment knowledge that was average or higher. However, they were not alone in their overconfidence, 84 percent of Experienced Entrants and 74 percent of Holdover Account Owners reported the same.
Conclusion
Consistent with narratives about new market entrants, we found that New Investors were younger, more racially/ethnically diverse, and earned lower incomes than those more experienced. They generally had lower investment account balances than Experienced Entrants or Holdover Account Owners.
Investors frequently cited saving for retirement as a goal for their taxable investment. New Investors and Experienced Entrants both reported being primarily driven to open an account by this desire. It is unclear why they opted to use taxable investment accounts to do so, since there are vehicles specifically designed to save for retirement that offer tax-advantaged saving. While we can only guess as to why, it is possible that among other factors, the ease of opening an investment account and a lack of knowledge about the tax implications may explain why investors chose taxable investments to save for retirement.
Investors differed in how they made trading decisions. Holdover Account Owners more frequently cited relying on financial professionals relative to other sources of information, while New Investors sought the advice of friends and family, and Experienced Entrants did their own personal research.
A large portion of investors were unaware about important account features and had little knowledge about investing, particularly New Investors. Many reported not knowing whether their account charged commissions on trades or whether the account allowed purchasing on margin. New Investors also had very low levels of objective investment knowledge but were overconfident in their investing ability. However, many New Investors reported opening their accounts to learn about investing, so perhaps many are on a path to higher levels of investment knowledge.
Opportunities to enter the market with smaller amounts of money have eliminated certain barriers and have led to a new wave of investors with different profiles, desires, and a distinct set of needs.
Blog topics: Investing
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
Recent Posts
Recent Posts
Modern Money: New Investing in 2020
Modern Money: New Investing in 2020
By Kelly Griese
Wednesday, February 17, 2021
Recently, we read a fascinating study from the Financial Industry Regulatory Authority (FINRA) about the investing habits of young people and how those habits compare to older, more established investors. The full study is linked below, and we encourage you to read it. But for those who want an overview of the results, you’re in luck! We convinced the folks at FINRA to write a guest blog post for MoneyWise Matters.
Investing 2020: New Accounts and The People Who Opened them
During 2020, the COVID-19 pandemic and associated market and income volatility dramatically altered the financial well-being of many U.S. households. Nevertheless, a surge of new retail investors flocked to the market, opening taxable investment accounts. So, who are these newcomers? Media coverage can be filled with speculation about the characteristics and habits of new investors.
To cut through the opinions, the FINRA Foundation partnered with NORC at the University of Chicago on a rigorous research study to get some real answers.
The study grouped investors into one of the following categories:
- New Investors who opened taxable investment account(s) in 2020 but had not previously done so
- Experienced Entrants who opened new investment account(s) in 2020
- Holdover Account Owners who kept their existing account(s) opened before 2020 but did not open any new ones.
Who are the New Investors?
They are young. New Investors were younger than experienced investors. Nearly two-thirds were under age 45. The plurality of both New Investors and Experienced Entrants were between 30 and 44 years old. In comparison, the largest portion of Holdover Account Owners were over 60 years old.
They are racially and ethnically diverse. While most investors (of any investment group) were white, New Investors were more diverse. New Investors had the highest proportion of African American investors. There were more Hispanic/Latino investors in both the New Investors and Experienced Entrants segments. Holdover Account Owners had the smallest proportion of African American or Hispanic/Latino respondents.
Their incomes are not high, and their account balances reflect it. New Investors earned less income than their more experienced counterparts. While across all investors the plurality earned $100,000 or more annually, only 28 percent of New Investors earned that amount. In addition, almost a quarter of New Investors earned less than $35,000 annually. In comparison, only 7 percent of Holdover Account Owners and 16 percent of Experienced Entrants reported earning less than $35,000 annually. New Investors also generally held much smaller account balances. Thirty-three percent of New Investors held account balances of less than $500, while only 16 percent of Experienced Entrants and 6 percent of Holdover Account Owners held account balances of this amount. Nearly half (46 percent) of Holdover Account Holders had account balances exceeding $25,000.
Why did they open an account?
It’s fun. Overall, most investors reported that they liked investing. Sixty-one percent of New Investors agreed with the statement “I enjoy investing” as did 72 percent of Experienced Entrants. Holdovers were least likely to report that they enjoyed investing, with 54 percent at least somewhat agreeing with the statement.
But really…why? When asked to report on what prompted them to open a new investment account, New Investors reported being motivated by the ability to invest a small amount of money and the dips in the market that made stocks cheaper to buy. Experienced Entrants had similar top reasons, though they differed slightly. Investing for a goal other than retirement, and the ability to invest small amounts made up some of the top reasons for Experienced Entrants. Despite our focus on investing in taxable accounts, those who opened accounts in 2020 most frequently cited saving for retirement as a top reason.
There were also some key differences in investors’ goals by race and ethnicity. Among white and Asian investors, the most cited reason for opening a new investment account in 2020 was saving for retirement, but among African American and Hispanic/Latino investors, the top reason was the ability to invest with small amounts of money.
They have investment goals. The future goals of investors aligned somewhat with why they opened an account in the first place. Across all investors, the most common goal that was cited for their taxable investment was “saving for retirement.” For New Investors, the second-most common goal was learning about investing, while for Experienced Entrants it was speculating, or making fast profits, to build wealth. For Holdover Account Owners, the second-most frequently cited goal was saving for an upcoming expense other than retirement.
They don’t report taking high risks. While there is media coverage suggesting that New Investors are prone to taking high risks, our findings indicated that New Investors (like the other segments) were most likely to report taking average financial risks, expecting average returns. Forty percent of New Investors reported a willingness to take substantial or above-average financial risks (expecting returns that were substantial or above-average), which is lower than that reported by Experienced Entrants or Holdover Account Owners, but still sizeable.
What are their investment habits?
They trade more frequently. Investors who opened accounts in 2020 traded more frequently than Holdover Account Owners. Sixty-one percent of New Investors and 62 percent of Experienced Entrants reported at least one trade per month.
They mostly trade individual company stocks. Roughly two-thirds of both New Investors and Experienced Entrants reported trading individual company stocks, the most frequently traded type of investment. Stocks were followed by mutual funds and exchange-traded funds (ETFs), but at much lower levels. Only about one-third of New Investors and Experienced Entrants reported trading these funds. New Investors’ high use of company stocks suggests a disconnect between the risk they reported being willing to take and the amount of risk they are actually taking. Individual company stocks can carry a high level of risk, typically more so than a well-diversified mutual fund, for example.
Many are unclear about what their accounts offer. Most New Investors (and Experienced Entrants) reported that their account offered commission-free trades, but over one-third of New Investors and nearly a quarter of Experienced Entrants reported not knowing whether they were paying commission on trades. Similarly, most New Investors and a plurality of Experienced Entrants did not know whether their account allowed them to make purchases on margin. Of those reporting a margin account, only about one-quarter reported actually using margin to purchase investments. While they were more certain about whether they had traded options, only 16 percent of New Investors and 29 percent of Experienced Entrants reported ever having done so.
They access their accounts online. An overwhelming majority of investors used the internet to access their accounts. Nearly half of New Investors reported accessing their accounts primarily via mobile app, while three-quarters of Holdover Account Owners reported accessing their account primarily through a computer. Experienced Entrants were more divided, with 40 percent accessing via mobile app and 54 percent accessing primarily through a website.
They seek advice from people who aren’t financial professionals. While nearly half of Holdover Account Owners relied on information from financial professionals for making investment decisions, only 23 percent of New Investors and 39 percent of Experienced Entrants did so. Instead, New Investors tended to seek information from friends, colleagues, and other family members (38 percent), while Experienced Entrants often reported they preferred doing “other personal research” (42 percent). Both New Investors and Experienced Entrants reported seeking information from the company in which they planned to invest (37 and 42 percent, respectively). Regulators were the least often used information source across the three investor segments.
How much (little) do they know about investing?
Many don’t know a lot. The objective investment knowledge of new investors, measured through a 5-question quiz, was very low. On average, New Investors could answer only 1.4 out of five questions correctly. In comparison, Experienced Entrants were able to correctly answer 2.3 out of five, and Holdover Account Owners 1.8 out of five.
But they don’t seem to realize it. When asked to assess their overall investment knowledge, New Investors reported considerably high levels of confidence relative to their objective knowledge. Sixty-two percent of New Investors reported a level of investment knowledge that was average or higher. However, they were not alone in their overconfidence, 84 percent of Experienced Entrants and 74 percent of Holdover Account Owners reported the same.
Conclusion
Consistent with narratives about new market entrants, we found that New Investors were younger, more racially/ethnically diverse, and earned lower incomes than those more experienced. They generally had lower investment account balances than Experienced Entrants or Holdover Account Owners.
Investors frequently cited saving for retirement as a goal for their taxable investment. New Investors and Experienced Entrants both reported being primarily driven to open an account by this desire. It is unclear why they opted to use taxable investment accounts to do so, since there are vehicles specifically designed to save for retirement that offer tax-advantaged saving. While we can only guess as to why, it is possible that among other factors, the ease of opening an investment account and a lack of knowledge about the tax implications may explain why investors chose taxable investments to save for retirement.
Investors differed in how they made trading decisions. Holdover Account Owners more frequently cited relying on financial professionals relative to other sources of information, while New Investors sought the advice of friends and family, and Experienced Entrants did their own personal research.
A large portion of investors were unaware about important account features and had little knowledge about investing, particularly New Investors. Many reported not knowing whether their account charged commissions on trades or whether the account allowed purchasing on margin. New Investors also had very low levels of objective investment knowledge but were overconfident in their investing ability. However, many New Investors reported opening their accounts to learn about investing, so perhaps many are on a path to higher levels of investment knowledge.
Opportunities to enter the market with smaller amounts of money have eliminated certain barriers and have led to a new wave of investors with different profiles, desires, and a distinct set of needs.
Blog topics: Investing
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
Can't Stop, Won't Stop, GameStop
Can't Stop, Won't Stop, GameStop
By Kelly Griese
Wednesday, February 3, 2021
For the first time in what feels like a long time, I’m writing about something entirely unrelated to the Coronavirus pandemic, so you know the news is big. Big enough to convince comedian Jon Stewart to join Twitter. Big enough to create agreement between Alexandria Ocasio-Cortez (AOC), Ted Cruz, and Donald Trump, Jr. Big enough to put GameStop, Blockbuster, and AMC back in news headlines. So unless you’ve been living under a rock, you’ve probably heard about some weird stuff happening with the financial markets in recent weeks.
It’s a wild story with a lot of moving pieces, and I’ve spent the better part of a week trying to figure out how to explain all that’s happening. I settled on one of my favorite phrases for inspiration, “keep it simple, stupid.” In this blog post, I’ll do my best to explain “shorting” and hedge funds without giving anyone a migraine. I’ll also explain how GameStop, Reddit, and Robinhood are involved. And then I’ll get around to talking about regulation and fraud prevention.
Short Sales, Options, Margin Trading
As I have told you time and time again, ALL investing involves risk, but some securities products and investing practices come with greater risk. First, some terminology.
- Margin Trading: using borrowed money to buy securities
- Options: contracts to buy or sell a stock for a specified price on or before a certain date
- Short Sale: occurs when you sell a stock you do not own with the expectation that the price of the stock will fall
The U.S. Securities and Exchange Commission (SEC) explains all of these terms in more detail in a new investor alert that was triggered in response to last week’s weirdness. These terms feel foreign to many people. The average investor will likely never think twice about such complicated and risky forms of investing, but now that these methods and products are in the news, I feel obligated to help you understand.
Let’s go back to short sales. There are some wonderful plain-speak explanations online, including this one from NPR, but here’s what you need to know. When someone “shorts” a stock, they’re essentially gambling on that stock’s performance, believing it will soon drop in value. The investor borrows shares of the stock and quickly sells them, let’s say for $10 a share. Once the value of the stock drops, let’s say to $5 a share, the borrower quickly buys back the sold shares and returns them to the original owner, while pocketing the difference. In this example, the borrower would have made a $5 profit off each share. But what happens if the stock value doesn’t drop? That’s when short sellers lose money, because they must buy back the shares at a higher cost.
Can’t Stop, Won’t Stop, GameStop
The second of the two scenarios above is what happened with GameStop stock. For those who don’t know, GameStop is a retailer of video games, supplies, and novelty items. The company is seen by some to be on a path to extinction, with digital sales overtaking physical sales. These apocalyptic forecasts for GameStop led to its stock being targeted by short sellers, who could have bought in at $18 per share on January 7. But it wasn’t long before some members of a Reddit forum called WallStreetBets took notice. Those “Redditors” started purchasing shares of GameStop stock (NYSE: GME), driving up the cost to a high of $347 on January 27. This massive swing in valuation is newsworthy enough on its own, but it was the impact on hedge funds and investing apps that truly captured attention.
Hedging Your Bets
Now I’ll pause in talking about all that unfolded to explain hedge funds. I’ll use Investopedia’s description. “A hedge fund is just a fancy name for an investment partnership that has freer rein to invest aggressively and in a wider variety of financial products than most mutual funds.” It’s a group of investors who pool their money into a fund which is then managed by a professional. The idea is to maximize returns and reduce risk. Mutual funds aim to do the same thing, but hedge funds tend to be more aggressive, risky, and exclusive.
My Main Squeeze
What role do hedge funds play in all the GameStop stuff? Well, it seems the goal of at least some of the new GameStop investors was to hurt hedge funds that had bet against GameStop. This is what’s known as a “short squeeze.” The word short refers back to the idea of short sales, and the word squeeze refers to the pressure placed on the folks who initially shorted the stock. In the case of GameStop, one of the main hedge funds being squeezed is managed by Citron Research. The Redditors’ actions put pressure on Citron to buy back shares at a significant loss. Another hedge fund that was squeezed is managed by Melvin Capital, which lost more than 50% in January. This all led to a flurry of commentary on social media—complete with memes—that only heightened the buying frenzy.
Robinhood Has Entered the Chat
Many of the Redditors used investing apps to purchase shares of GameStop. One of the more popular apps is Robinhood, which offers commission-free trading in stocks, options, and funds. The high trading volume with GameStop and several other stocks led to Robinhood making the decision to restrict transactions. Robinhood cited financial requirements, including “SEC net capital obligations and clearinghouse deposits,” as mentioned in Robinhood co-founder Vladimir Tenev’s Twitter feed. Tenev went on to say, “We did this because the required amount we had to deposit with the clearinghouse was so large—with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements—that we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements.”
The whole ordeal caught the attention of a number of high-profile people, including celebrities and politicians. On January 28, U.S. Representative Alexandria Ocasio-Cortez (D-NY) called on Congress to investigate Robinhood, and her Tweet about it was shared by Senator Ted Cruz (R-TX). Congress has not taken any action at this time.
The Role of Regulation
And so began the argument over free market versus regulation, with everyone pointing fingers. Robinhood says it was forced to restrict trading because of the SEC. Redditors say Robinhood was doing the exact opposite of the fictional character for which it is named by trying to keep billionaires from losing money.
Robinhood isn’t alone in restricting trading. Several self-service investing platforms did the same thing. Regardless of whether they did so to meet SEC requirements, retail investors were not pleased. The Redditors and their supporters argue they were just taking advantage of the system and playing the same game as hedge fund operators. This led to additional criticism about how financial markets are regulated.
Last Friday, January 29, the SEC released a statement saying it is, “closely monitoring and evaluating the extreme price volatility of certain stocks’ trading prices over the past several days.” The statement did not mention Robinhood specifically, but the SEC said it would, “review actions taken by regulated entities that may disadvantage investors or unduly inhibit their ability to trade certain securities.”
Avoiding Loss and Fraud
The drama above will likely end in financial losses for a great many people. The Redditors and those who jumped on board could lose money once GameStop stock drops. The hedge fund investors could lose money in the interim if they’re unable to hold during all this instability. Sadly, many of you could lose money as well, because a number of pension plans hold positions in hedge funds. CNBC points to data from the Center for Retirement Research at Boston College, which shows that roughly 7% of the $4.5 trillion in state in local pension plans are allocated to hedge funds. These pension plans support 14.7 million workers and 11.2 million retirees. Simply put, you could lose money without ever even knowing about the GameStop saga.
Some financial loss is out of our control, but there’s a lot we can do to protect our money. Start with these simple tips:
- Don’t take unnecessary risks. Risk is the chance you take that you will lose money or that your money will lose value by earning less than the rate of inflation. We all have different levels of risk tolerance, and you should be investing based on your personal preferences and financial goals.
- Diversify. “Don’t put all your eggs into one basket.” No investment performs well all the time, so you should spread your investments around to reduce risk and increase your overall return. To learn some diversification strategies, check out Investopedia’s page on the topic.
- Investigate before you invest. Perform a Registration Search and look at company filings on the SEC EDGAR website. You can also contact the Indiana Securities Division by calling (317) 232-6681 or visiting the Indiana Securities Portal.
- Think long term. Understand that while there are fluctuations, in general, the market has trended up over the long term. Consider the timeframe for your investment goals – when do you hope to retire, or semi-retire and pursue your own hobbies or interests full time?
No investor education blog post would be complete without the most basic warning about investment fraud and how to avoid it. Constant vigilance is key, so be on the watch for these red flags:
- The seller isn’t licensed or registered. Licenses and registrations can be easily reviewed using the registration search on the Securities Portal. Individuals and firms in the financial services industry must meet certain requirements in order to be licensed. Another valuable resource for determining whether an individual or company is registered is BrokerCheck by FINRA.
- No written information is provided. Ask for a prospectus or disclosure statement. These are legal documents that provide details about an investment offering. The prospectus, or “offer document,” will contain the facts and information you need to make an informed investment decision.
- The sales pitch is rushed and aggressive. You should be suspicious of any seller who pressures you to “act now” or says this is a “limited time offer.” If they are pushing you to make a decision immediately, it is probably because they do not want you to find out that the investment is a scam. Also, anyone who won’t take “no” for an answer is probably up to no good.
- The seller is hesitant to answer your questions. Con artists seem to have an answer for everything, but if your questions make them uncomfortable, it’s best to walk away.
- The seller promises high returns with little or no risk. Returns and risks go up and down together. If you want a chance at high returns, you have to accept high risks. If you’re a low risk investor, chances are the returns will be modest. Also, there is no such thing as a “no risk” investment. All investing comes with some risk attached.
- You’re asked to keep this “exclusive” offer a secret. Con artists don’t want to be caught, and so they pick their victims carefully. They don’t want you telling someone who might uncover the scam.
Final Thoughts
What happened with GameStop is an anomaly. If you are new to investing or haven’t yet started saving for the future, don’t let this strange story scare you away from the financial markets. Investing is still the best way to grow your money and save for retirement.
Also, please don’t blame me for what happened just because I wrote about The Economics of Animal Crossing! I saw some memes pointing fingers at the Nintendo Switch game, which has a stock market element built in. Plus, something good came out of the GameStop story. A Minnesota man who made money off GameStop stocks bought and donated Nintendo Switches and games to the Children’s Minnesota Hospital in Minneapolis.
If you want to read more about all that happened the past two weeks, check out this list of additional content I read to help me write this blog post.
CNET – Robinhood troubles
The Verge – AOC and others call for investigation
CNBC – Why the GameStop frenzy may hurt retirees
CNN – Robinhood to ease trading restrictions
SEC – Thinking of day trading? Know the risks.
FINRA – Social sentiment investing tools – think twice before trading based on social media
Blog topics: Fraud Prevention, Investing
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
Understanding Unemployment
By Kelly Griese
Wednesday, January 20, 2021
Unemployment is in the news a lot right now, and we know you have questions. That’s why we turned to our friends at the Indiana Department of Workforce Development. They wrote this week’s guest blog.
Since mid-March when businesses began shutting down due to the coronavirus, the Indiana Department of Workforce Development (DWD) has paid out through the end of 2020 $6.3 billion in unemployment insurance benefits to nearly 775,000 Hoosiers. The $6.3 billion includes $4 billion in federal aid and $2.3 billion in state dollars.
That’s a staggering amount considering in the time leading up to the pandemic DWD received only about 2,500 claims weekly from individuals seeking unemployment assistance. To put the numbers into perspective, in a three-week period in March-April 2020, nearly 380,000 Hoosiers filed a claim for Unemployment Insurance (UI) benefits.
As we enter 2021, more Hoosiers are returning to work and fewer are filing for unemployment. Yet for those who remain out of work, the federal government is offering more financial assistance through the Continued Assistance for Unemployed Workers Act of 2020, known as CAA.
The Act provides for an extension of the CARES Act in the form of $300 in weekly unemployment compensation for 11 weeks through March 14. Both workers on normal UI and Pandemic Unemployment Assistance (PUA) will receive the extra payment to their core weekly unemployment benefits.
PUA was created to provide benefits for the self-employed who would not qualify for normal UI benefits. Under the new legislation, some “mixed-income” earners who get income from both traditional and self-employed sources now qualify for an extra $100 on top of the extra $300 a week. To qualify for the benefit, workers must make at least $5,000 in qualifying self-employment income annually.
Indiana began paying CAA benefits on January 8 to those on regular UI, retroactive to January 2. Eligible Hoosiers receiving PUA should begin receiving their $300 weekly benefit by the end of January and will be paid retroactive to December 27.
DWD would be remiss if it didn’t mention the numerous attempts by fraudsters to collect UI benefits through identity theft. The schemes of the fraudsters change on a rapid basis. DWD continues to send out notifications to claimants and businesses to alert them of the fraud. In one instance, the fraudsters set up a fake social media page and website and used the DWD logo to lure would-be claimants to it. The site claimed to be the Indiana Department of Workforce Developments. They put an “s” at the end of the word “Development”. This subtle change to the name is easily missed. We have since had the page and site shut down and are working with our federal and state law enforcement partners on this matter.
If you or your company believe you have become a victim of identity theft or unemployment fraud, contact DWD. More information on how to report fraud can be found at www.unemployment.in.gov, click on Report Unemployment Fraud.
Blog topics: Fraud Prevention
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
Stimulus Payment Scams
By Kelly Griese
Wednesday, January 6, 2021
By now, many of you should have received another stimulus check. Just before the new year, the Internal Revenue Service (IRS) and Treasury Department began delivering a second round of Economic Impact Payments (EIP) as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CARES) to millions of Americans who also received the first round of payments. Direct deposits began on December 29, and the first paper checks were mailed out on December 30. Not everyone will receive their payments at the same time, but you can monitor the status of your payment by visiting https://www.irs.gov/coronavirus/get-my-payment.
The IRS emphasizes that there is NO action required by eligible individuals to receive this second payment.
And yet… scammers would like you to believe otherwise. As with the first round of stimulus payments, plenty of con artists are working overtime to steal your money and more. The IRS warns that one of the new scams involves criminals texting you to say further action is required for you to receive your stimulus payment. The text includes a link to a phishing website, which appears to come from a state agency or relief organization, and that website directs you to a fake website impersonating the IRS.gov Get My Payment website. Scammers are looking to collect your personal and financial account information. If you receive one of these text messages, you’re asked to take a screen shot of the message and then email that image to phishing@irs.gov with the following information:
- Date/Time/Time Zone that you received the text message
- The number that appeared on your Caller ID
- The number that received the text message
Remember, the IRS does NOT send unsolicited texts or emails, and the IRS will not call you with threats of jail or lawsuits, nor will it demand tax payments using gifts cards.
The Federal Trade Commission (FTC) reiterates some of these points by stressing the following:
- The government won’t ask you to pay anything upfront to get this money. Anyone who does this is a scammer.
- The government won’t call, text, email, or contact you on social media to ask for your Social Security, bank accounts, or credit card number. Anyone who does so is a scammer.
- There’s no such thing as getting your money early or faster. Anyone who says they can hook you up now (or soon), is both lying and a scammer.
If you are contacted by a scammer using these tricks, you should reach out to the FTC by visiting https://reportfraud.ftc.gov.
Finally, the IRS has a great page of information regarding some frequently asked questions, and I encourage you to bookmark it for reference. It addresses questions about eligibility, delivery methods, and how much money you can expect to receive.
The Economic Impact Payments and the CARES act are issues we will continue to follow throughout the pandemic. Medical and economic responses are ever evolving. Indiana MoneyWise is committed to delivering you the most timely, relevant, and accurate information when it comes to your finances.
Blog topics: Fraud Prevention
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
Holiday Hiatus
By Kelly Griese
Wednesday, December 23, 2020
Happy Holidays from MoneyWise Matters!
We are taking the next couple of weeks off to celebrate the season, but before signing off wanted to bid a fond farewell to one of our writers.
Kylee Hale joined the Indiana Securities Division in May of 2017. I vividly remember her first trip to the office for an interview. She impressed us all with her ideas and her attitude. She impressed us even more when she promptly sent handwritten thank you notes to everyone she met that day. (I still have mine.)
As the only investor education coordinator prior to Kylee’s arrival, I was excited to have a teammate, and Kylee didn’t disappoint. We bounced ideas off one another and learned from each other. We often told people that we were “partners in crime… prevention.”
This blog is Kylee’s greatest legacy to the office. It was her idea, and she worked tirelessly to build and grow it.
While we’re certainly going to miss having Kylee as part of our team, and are jealous of her new coworkers, we wish her all the best in her next adventure. Fortunately for the citizens of Indiana, she’s still a state employee, and we’re confident she will continue to provide unparalleled service to all Hoosiers.
See you in the New Year!
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
COVID-19 Vaccine Scams and Misinformation
COVID-19 Vaccine Scams and Misinformation
By Kelly Griese
Wednesday, December 16, 2020
Monday’s top headlines included items both routine and groundbreaking. The news vacillated between the awarding of Electoral College votes (which doesn’t normally receive live coverage) and the first COVID-19 vaccinations of Americans. This is what’s known as a “split-screen moment” in the news business. My education and career background are in television news, and prior to joining the Secretary of State’s office, I worked as a news producer for ten years. When there are dualling headlines, it’s common for TV news providers to split the screen in order to show their viewers everything that’s happening at the same time. But while hardly anyone is still talking about the Electoral College today, I’m sure your social media feeds are filled with discussions of the vaccine, and there could be some misinformation and scams sprinkled within.
First, some information about the vaccine itself. Currently, the only approved vaccine comes from Pfizer-BioNTech. It’s designed to prevent COVID-19 disease, which is caused by a coronavirus called SARS-CoV-2. The vaccine received emergency use authorization from the U.S. Food and Drug Administration (FDA) on December 12, 2020. It’s approved for individuals age 16 and older, and it’s administered as a 2-dose series, 3 weeks apart. You can view the FDA’s vaccine fact sheet here, which includes a list of the vaccine’s ingredients, possible side effects, and a list of medical conditions you should discuss with your healthcare provider before getting the vaccine. A second vaccine made by Moderna could be approved as early as this week, and just yesterday the FDA authorized the first over-the-counter, at-home diagnostic test for COVID-19.
I’m not a vaccine expert. I’m not a virus expert. I’m a scam expert. That’s the focus of this blog post: scams related to COVID-19 and these new vaccines against it. While the Indiana Securities Division has no current reports of investment fraud related to COVID-19 vaccines, we know that con artists love emergencies and disasters. When Ebola captured headlines in 2014, social media feeds were filled with posts offering investments in fake cures, treatments, and preventions. When hurricanes hit, there’s no shortage of scammers offering insurance, repairs, and financial relief. When wildfires destroy communities out west, fake charities exploit your generous desire to help those in need.
Why are con artists drawn to emergencies and disasters? Our fear, uncertainty, and confusion make us more vulnerable to exploitation. Plus, it’s something we’re all talking about, all the time. COVID-19 is in every newscast we see, every newspaper we read, and updates on the virus flood our social media feeds. All these factors combined make COVID-19 simply irresistible to crooks. I call it a headline scam, because just like the rest of us, scammers follow the headlines.
When it comes to COVID-19 vaccines, the danger is greater than ever, because in a public health emergency, a scam can prevent you from getting the real information and medical attention you need. I discussed this issue last week in an interview with WRTV investigative reporter, Kara Kenney. Con artists are contacting people by email, phone, text, and social media. They’re offering fake cures, fake vaccines, fake treatments, and fake tests. Their end goal is to steal your money and/or personal information. Some of the scams are easy to spot, but others are highly sophisticated and look authentic.
So how can you recognize a vaccine-related scam? The Federal Trade Commission offers these tips:
- You likely will not need to pay anything out of pocket to get the vaccine during this public health emergency.
- You can’t pay to put your name on a list to get the vaccine.
- You can’t pay to get early access to the vaccine.
- No one from a vaccine distribution site or healthcare payer, like a private insurance company, will call asking for your Social Security number or your credit card or bank account information to sign you up to get the vaccine.
- Beware of providers offering other products, treatments, or medicines to prevent the virus. Check with your healthcare provider before paying for or receiving any COVID-19-related treatment.
If you believe you’ve been contacted by a con artist, you can report it to the FTC at ReportFraud.ftc.gov or file a complaint with the Indiana Attorney General.
You can monitor the latest scam and fraud reports by following the FTC consumer blog and checking the Better Business Bureau’s Scam Tracker.
To protect yourself and your loved ones from the virus, continue to follow guidance from health officials. Here’s a link to the Centers for Disease Control and Prevention website with the latest information on COVID-19, and here’s a link to Indiana-specific information on COVID-19.
The good news is that we finally have a vaccine, and that’s certainly something to celebrate (in a responsible, socially distanced way). In the coming weeks and months, you’re going to hear a lot about COVID-19 vaccinations. Just make sure you’re getting that information from credible outlets. And while you’re waiting to get your own vaccination, please continue to behave responsibly in order to keep yourself and others healthy.
Blog topics: Fraud Prevention
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
It's Almost Tax Time! Preparing for the 2021 Tax Season
It's Almost Tax Time! Preparing for the 2021 Tax Season
By Kylee Hale
Wednesday, December 9, 2020
You may not be thinking about taxes this time of year, but the Indiana Department of Revenue (DOR) is always thinking about taxes and the upcoming tax season. With individual filing starting at the end of January, we're not too far away from the 2021 tax season. So, what can you do to prepare? We asked Michelle Cain, Director of External Communications, Indiana Department of Revenue if she would provide her insight. Below is a guest post with a few suggestions from DOR:
- Know the dates! Remember, paying taxes is required by law for almost everyone who makes more than $1,000 in a year. Tax Day for 2021 is April 15th.
- Don’t file until you have all your paperwork. One of the biggest mistakes individuals make is rushing to file their taxes to get a quick refund before they have all the necessary paperwork. This can result in a smaller refund than owed or an unexpected bill later when all documents have been processed.
- File your taxes electronically. Filing electronically is the most convenient option for many taxpayers. There are many benefits to filing taxes electronically, including faster refunds, increased security and fewer errors. One of the biggest mistakes made by paper filers is math errors, by filing electronically the computer does the math for you.
- File online for free. Millions of Hoosiers qualify to file their federal and state taxes online for free using Indiana Free File, but only 115,000 took advantage of this offer last year. New vendor offers for the 2021 tax season will be posted on the INfreefile website at www.freefile.dor.in.gov.
- Assistance for low-income individuals and senior citizens. If you are a senior citizen looking for assistance with preparing your individual income taxes, there are organizations available to help such as the AARP Foundation Tax-Aide program and the IRS Volunteer Income Tax Assistance and the Tax Counseling for the Elderly.
- Stay informed about Indiana credits and deductions. Be in the know about Indiana's many credits and deductions. You can find a list of Indiana's tax credits and Indiana's tax deductions on DOR’s website.
If you need assistance this season, the Indiana Department of Revenue is available to help. You may call us at 317-232-2240, Monday through Friday 8 a.m. - 4:30 p.m. EST.
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
COVID-19 Scams and Fraud Schemes
COVID-19 Scams and Fraud Schemes
By Kelly Griese
Wednesday, December 2, 2020
Here at Indiana MoneyWise, we’re avid followers of the Federal Trade Commission blog and highly recommend you follow it in addition to MoneyWise Matters. This week, while seeking writing inspiration, I stumbled across one of their posts from June, called “What do COVID-19 scams look like in your state?” As an investor education coordinator, I do my best to stay up-to-date on common scams and fraud schemes, and the title of this blog post promised state-specific data! I was intrigued, but also a little intimidated by the wealth of number-specific data.
Side note in the form of a confession: I am terrible at math. Not only that, but I’m afraid of it. Despite having zero psychological training, I have diagnosed myself with mathematical anxiety, which is a real phobia. I go out of my way to avoid having to do any sort of calculations. Even the most basic addition, subtraction, multiplication, or division problems trigger a physical response that can include elevated heart rate, fear, sweating, and sometimes tears. Despite this, I’m fascinated by statistics and data, and I see myself a citizen scientist with an abundance of curiosity.
So what does the data tell us about COVID-19 scams in Indiana? Quite a lot, actually. But first, a short explanation of the FTC’s state-specific data on COVID-19-related issues. It’s based on complaints the FTC receives from consumers related to COVID-19, with reports about online shopping problems topping the list of complaints in most states. Under its expanded reporting, the FTC created a data dashboard that lets you click on your state to see what people near you have been reporting, and you can see how people across the country are being affected, too. The dashboard was announced back in June, but it is regularly updated.
Here’s a quick look at the most recent numbers. This data was last updated on November 30, and it reflects overall reports since January 1, 2020.
The FTC points out that the data reflects reports in the Consumer Sentinel Network that mention COVID, stimulus, N95 and related terms. Everything on this map (the real one, not the screen grab I posted above) is interactive. You can view more information about the reports by type, trends over time, state-specific reports, or top reports by subject, such as online shopping or vacation and travel.
Now let’s look at the Indiana-specific data.
Our numbers are consistent with reports in other states. Top reports relate to online shopping and vacation & travel. Though when you move further down the list of top reports, there are some differences. At a national level, reports include problems with diet products, plans, and centers as well as credit bureaus. In Indiana, reports include problems with banks, credit unions, and savings and loans centers as well as online payment services. Median fraud loss at a national level is $323, while median fraud loss in Indiana is $300.
Returning to national numbers when it comes to how consumers were contacted and the payment methods used, we can see that e-mail and credit cards dominate in the number of reports. This graph also look at the amount of money lost in each category.
So what does all this data tell us? Well, there are a lot of people out there getting ripped off, and there’s no shortage of scams and fraud schemes looking to take advantage of our fear and confusion when it comes to the Coronavirus. With virus cases on the rise once again, and expected to continue to trend upward this winter, well all must take caution against getting sick but also against losing money.
To protect yourself and your loved ones from the virus, continue to follow guidance from health officials. Here’s a link to the Centers for Disease Control and Prevention website with the latest information on COVID-19, and here’s a link to Indiana-specific information on COVID-19.
To protect yourself and your loved ones from scams and fraud schemes related to COVID-19, follow this guidance from the FTC.
- Learn how to tell the difference between a real contact tracer and a scammer. Legitimate tracers need health information, not money or personal financial information.
- Don’t respond to texts, e-mails or calls about checks from the government. Here’s what you need to know.
- Ignore offers for vaccinations and miracle treatments or cures. Scammers are selling products to treat or prevent COVID-19 without proof that they work.
- Be wary of ads for test kits. Most test kits being advertised have not been approved by the FDA, and aren’t necessarily accurate.
- Hang up on robocalls. Scammers are using illegal robocalls to pitch everything from low-priced health insurance to work-at-home schemes.
- Watch for emails claiming to be from the CDC or WHO. Use sites like coronavirus.gov and usa.gov/coronavirus to get the latest information. And don’t click on links from sources you don’t know.
- Do your homework when it comes to donations. Never donate in cash, by gift card, or by wiring money.
There’s a lot of information out there, and I know it can be confusing knowing who to trust. Stick to well-known, credible outlets. Also be aware that guidance can sometimes change based on new information. As scientists learn more about COVID-19, their advice on how to avoid the virus will be updated. If we all follow the latest alerts and guidance, we will get through this together.
Blog topics: Fraud Prevention
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
Scams Are On The Rise This Holiday Season
Scams Are On The Rise This Holiday Season
By Kylee Hale
Tuesday, November 24, 2020
This Thanksgiving most of us are finding a happy balance between spending time with loved ones and safely distancing. Some traditions will be put on hold, and creative improvising will likely replace the things we can’t do together this year. However, regardless of these unique situations, there are some folks who are not interrupted: scammers. Fraudsters heighten their hunt for easy victims around this time of year. As more people, specifically 71% of consumers revealed by a CreditCards.com survey, plan to do their holiday shopping online, fraudsters lay out their traps for easy swindling. Watch out for these entanglements and take caution to avoid being duped this holiday season.
Online Card Skimming
What originally started as a device placed over ATM and gas pump card readers has morphed to online skimming created by hackers. Malicious code is injected into legitimate websites to grab payment data. While companies are distracted and adapting to remote functionality, these sly embedded code attacks go undetected. A site infected with a skimmer doesn’t look or act any different than one that isn’t infected, however, sticking to larger retailers that have a good track record for maintaining security is your best bet for safety. When possible use PayPal or a similar third-party processor for transactions. Also check for the copyright tag typically posted at the bottom of the page to see that the site is up to date and maintained.
Seasonal Scams
In a previous post, Holiday Scams, we discuss fake charities and social media gift exchanges. Modifications of these scams reappear every year and sometimes new ones pop up. What may be old to you, may catch another person off guard. A scam I have just heard about this year pertains to a letter from Santa or an elf written to children requesting personal data. Some legitimate businesses offer this sweet idea as a holiday treat for little ones. However, there are scammers who use this ploy to get personal information about adults and children to steal identities and compromise credit. This is normally more successful when the child is the victim because parents are less likely to check a child’s credit report assuming they don’t have credit at a young age.
Phishing Websites
Phishing attempts come in many forms. From websites that are not secure, to copycat emails and even phone calls from impersonators. Scammers have many tricks up their sleeve to try to convince consumers to give out their personal information, credit card numbers, passwords and more. When surfing the web, be sure the site is secure by looking for https: versus http: and a lock icon at the end of the web address. If you receive an email from a provider wanting to confirm your credentials, hover over the links in the email to check for bad grammar and strange addresses. If something seems out of place, try googling it. The other day I received an email about my Netflix password. I thought the email looked a little strange, so I googled “Netflix password reset scam email,” and sure enough other consumers had already reported the scam with screenshots that matched the email I had received. If in doubt, you can reach out to the provider directly and ask about the email to confirm if there is an issue with your account and report the scam email to the company.
Financial Wellness
In addition to the pandemic, it’s also cold and flu season. Just as we hear about being healthy and taking care of ourselves, being financially well takes more effort this time of year too. The holidays increase sales, and charity donations peak during the fourth quarter of the year. Being smart about your holiday expenses and budgeting affects how you start the new year. Layaway seems to be making an appearance again this year, and if you’re unsure of how it works you can check out this post Shop Smart, Shop Safe. If you purchase with a credit card, don’t forget to make payments on time and in full. As long as you stick to a budget and save extras for last, your holiday spending should be merry and bright.
Protect Yourself
Protecting yourself from scammers and financial worry may seem like a battle, but it can be easier than you think. Use your intuition, if a product deal seems too good to be true or an email seems suspicious, be sure to investigate and report it to help others. Check your accounts regularly for unauthorized charges and work with your bank if something doesn’t look right. Look for return and refund policies if you are shopping an unfamiliar or new site before you make a purchase. Most people aren’t hanging out in coffee shops or lounging in community spaces during the pandemic, but if you do find yourself on public Wi-Fi, don’t make a purchase or input your private information while connected to public internet. For more precautions and ways to increase your safety against fraud check out 13 Ways to Protect Yourself From Scams and Identity Theft This Holiday Season.
There are many ways fraudsters try to target both online shoppers and consumers. As long as shopping exists, they will try to rip you off. The best thing you can do to get ahead of their deception is to stay informed. Be careful when disclosing your personal information online and use safer methods of payment. Check your account and report fraud when you see it. Being grateful for what we have this holiday season can shift the perspective and remember there will be a time when we can safely get together again.
Blog topics:
Budegting
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
Open Enrollment Season
By Kelly Griese
Wednesday, November 18, 2020
It’s open enrollment season. For my fellow State of Indiana workers, that means lots of email reminders from the State Personal Department (SPD) and your office HR director. Today (November 18) at noon is the open enrollment deadline for state employees. Here are some suggested action items from SPD, as they appeared in The Torch newsletter.
- Confirm or update personal information.
- If you wish to drop your insurance coverage you need to select “waive.”
- If you are eligible for the 2021 Wellness Premium Discount, your premium will automatically be reduced on which ever medical plan you select.
- Review your eligible dependents and beneficiaries.
- Check your current elections or make new elections.
- If you have a Health Savings Account (HSA), you need to enter your annual contribution amount.
- If you have a Flexible Spending Account (FSA), you need to re-elect or re-state your annual contribution amount.
- If you have a Commuter Reimbursement Account, your contribution will continue for 2021, unless you waive the coverage.
- Review the Non-Tobacco Use Agreement and accept or decline the agreement for 2021.
- Print an Election Summary after you have submitted your elections.
If you need help making last minute updates to your benefits, call the Benefits Hotline at 317-232-1167 or toll-free at 877-248-0007.
Medicare Open Enrollment Period
It’s also open enrollment season for Medicare. During this enrollment period, which ends December 7, Medicare beneficiaries can choose the plans that are best for them. To review your Medicare plan options with a trained, unbiased counselor, contact Indiana’s State Health Insurance Assistance Program (SHIP) at 800-452-4800.
SHIP recommends comparing coverage options every year, because Medicare plans can change over time, and your needs can change too! One thing remains constant… and that’s manipulative salespersons and con artists.
It’s important for you to understand what sellers are and are NOT allowed to do, so you’ll be prepared if an insurance agent or representative tries to enroll you in a Medicare plan that isn’t right for you. Here are some tips from Senior Medicare Patrol that will help you protect yourself.
There are limits on how Medicare plans can contact beneficiaries. Medicare plans:
- Can’t call you if you don’t have a relationship with their company.
- Can’t send you email if you haven’t agreed to this form of contact.
- Can’t come to your home to sell Medicare products without an invitation.
- Can’t leave flyers, door hangers, or leaflets on your car or at your home. However, agents and brokers who have a scheduled appointment with you may leave plan information at your residence if you don’t show up for the appointment.
When you meet or talk with an agent, they:
- Can’t start a discussion about other insurance products, like life insurance annuities, if your meeting is about Medicare Part C or Part D.
- Can’t set their own time limits for you to sign up for a plan. You have until December 7 to enroll, and you can’t get any extra benefits for signing up early.
- Can’t threaten to take away your benefits if you don’t sign up for a plan or offer gifts if you do.
- Can’t suggest that Medicare endorses or prefers their plan.
- Can’t discuss Medicare products you didn’t ask to talk about when you filled out a scope of appointment form.
Once you’ve picked the plan that’s right for you, be sure you get all the details in writing before signing up. Take your time to read all information and verify details. For example, reach out to your doctors to ensure they are in that plan’s network.
If a Scammer Calls
Scammers might call and pretend to be Medicare representatives or agents in an attempt to steal your Medicare number. They can use fake caller identification to impersonate Medicare or another organization you know, so don’t trust the name displayed on your phone’s screen. If anyone calls and asks for your Medicare, Social Security, or bank or credit card information, hang up. A scammer can use your personal information to file false claims, sign you up for a plan to which you didn’t agree, or even steal your identity. A legitimate Medicare employee will always have your Medicare number on file. If you think you’ve experienced Medicare fraud or abuse, call Indiana Senior Medicare Patrol at 800-986-3505.
Making decisions about your benefits can seem overwhelming, especially if you are new to the process, but there are a lot of helpful, non-biased sources of information for you to consult. The links I provided can help guide you through the process.
Blog topics:
Fraud Prevention
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
Save Money and Energy as Temperatures Drop
Save Money and Energy as Temperatures Drop
By Kylee Hale
Wednesday, November 11, 2020
Over the summer a survey revealed that one in five Americans have saved $1000 or more throughout the pandemic. Spending habits have shifted from nightlife and traveling to DIY home projects and streaming services. Even with this change, almost half of Americans spent less this summer than they did last year. The dire situation has changed financial habits for the better and many Americans are still looking for ways to save. As we continue to spend more time at home, using energy wisely and optimizing efficiency can make a big difference when it comes to utility bills. Here are some tips to make your money go further and hopefully have some extra to stash away.
1. According to Citizens Energy Group (Citizens), you can save as much as 10% on your heating bill just by turning back the thermostat by 7-10 degrees for 8 hours a day. Not to say you need to be uncomfortable if you aren’t leaving the house or are working from home. Keep warm by adding a layer of clothing or cozy up with a blanket. A pair of inexpensive house shoes can keep your toes warm on uncarpeted floors in the colder months.
2. For South facing windows, the sunshine can be a free source of warmth. Open curtains or blinds to let the sun warm up your home. As the sun goes down, be sure to close drapes and lower blinds to help create a barrier to the cold overnight.
3. Being mindful of where the vents in your house are pushing air out can optimize your energy use and comfort. Warm air rises so use a register to direct the air flow across the floor. Close vents and doors to unused spaces. If you have a spare bedroom you don’t need to temperature control it while no one is staying in the room. Be sure to close the damper on a fireplace that is not in use.
4. When decorating your home for the holidays, use LED lights instead of old incandescent light strands. LED lights are 70% more energy efficient, also brighter, and safer as they don’t produce as much heat. Limiting the hourly usage of lights by setting timers to automatically turn on when the sun goes down and turn off in the middle of the night can really cut down on energy costs.
5. Reduce the temperature on your water heater. Citizens estimates that a family of four, each showering for five minutes a day, uses 700 gallons of water each week. By lowering the thermostat on the water heater to 120 degrees, you’ll not only save money but avoid scalding your hands.
There are so many easy ways to save energy and multiple energy providers offer rebates and promotions to help consumers be smarter with energy consumption. Last year we created a post, Save Energy, Save Money that highlights energy providers across the state offering energy efficiency programs. The post also includes a video of one of our very own staff member’s home energy assessment with IPL. Reducing your energy consumption not only helps the environment, it keeps money in your pocket (unless you spend it on other things). As the seasons change, we’re less likely to go outdoors. Saving energy while optimizing the efficiency and comfort of our homes is a no brainer when it comes to conserving our financial resources during this pandemic. The above tips are low effort and yield a savings of money and resources for consumers and providers alike. For more energy saving tips, check out Save Energy, Save Money and for ideas to entertain yourself and your family while at home check out, Saving Money & Staying Sane While Staying at Home.
Blog topics:
Budegting
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
It's the Economy, Stupid!
By Kelly Griese
Wednesday, November 4, 2020
It’s been a wild year, to say the least. In addition to dealing with the COVID-19 pandemic, the election has been a top headline for as long as many of us can remember. These two issues are inextricably connected, and both have economic implications. Our daily lives (and the news cycle) are filled with chaos, confusion, and endless uncertainty.
I started writing this post last week and had it in shape to publish by the end of the day on Monday, November 2. By the time you read it, Election Day will be over, but it’s entirely possible we won’t yet know the outcome of many races. That said, you can be certain the markets will have reacted to early results.
The Economy
The word “economy” is big. It’s often used as a term that’s synonymous with the stock market, even though the economy is more than the buying and selling of securities. The New York Times published an article called “Repeat After Me: The Markets Are Not the Economy,” and I think it’s worth reading. It was published back in May, and so much has happened since then, but the main talking points of the article remain noteworthy. “The stock market looks increasingly divorced from economic reality.” Despite a few wild swings (which we might be able to chalk up to corrections), the stock market is strong, and perhaps investor confidence is too. But unemployment remains high, and small businesses are struggling to stay in business.
Financial Education
As an Investor Education Coordinator, I’m careful and intentional in how I discuss this. Vaguely or incorrectly using a term like “the economy” could make me appear to be oblivious to the struggles of the people I’m trying to reach. As the NYT article explains, while more than half of American households own shares or investment funds, the majority of stock portfolios are modest. “Stock ownership among the middle class is pretty minimal,” said Ed Wolff, an economist at New York University. “The fluctuations of the stock market don’t have much effect on the net worth of middle-class Americans.” And here’s why: the wealthiest top 10 percent of American households own about 84 percent of the value of all household stock ownership, according to the U.S. Federal Reserve.
The stock market is part of the economy, but it isn’t the whole economy. And this year, perhaps more than ever, the whole economy matters a whole lot. It was James Carville who famously said, “It’s the economy, stupid!” Carville was an elections strategist for then-Governor Bill Clinton, and he helped Clinton beat President George H.W. Bush in 1992 in the midst of a recession that left many Americans out of work and in debt. Today, many Americans are once again out of work and in debt. The economy (heavily influenced by the pandemic) is influencing the election, and concerns over the results of the election are further influencing the economy. It’s one of those vicious cycle things.
Here to Help
Regardless of who wins the election, many of us will continue to struggle with job security and debt, and COVID-19 will still be an issue of concern. For folks like me who aim to educate and improve financial lives, it’s important that we remain acutely aware of the concerns of those we serve, and that we deliver accurate information as well as compassion. Here at Indiana MoneyWise, we create a lot of our own content, but we also link you to outside resources that we have found to be incredibly useful. So whether you’re struggling with debt or unemployment, we can connect you to helpful information. And if you’re in good financial shape and looking to invest, we can help you avoid falling victim to fraud.
We provide free, statewide presentations on a wide variety of financial subjects. Currently, these presentations are all done via the web conferencing platform of your choice (we have experience with Zoom, Microsoft Teams, Google Meet, and WebEx). If you’d like to schedule a presentation, visit the Contact Us section of our website.
Blog topics:
Budgeting, Credit, Investing, Fraud Prevention
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.
Beware of Internet and Social Media Scams
Beware of Internet and Social Media Scams
By Kylee Hale
Wednesday, October 28, 2020
4 weeks until Thanksgiving, and turkey is not the only thing that comes to mind. As we approach the holiday season, gift giving and shopping is likely to look a little different this year. Rumors have spread that Black Friday shopping will be mostly online. While this may help consumers scout out the best deals, scammers prey on internet sales.
A recent post by the Federal Trade Commission (FTC) states that scammers are hiding out on social media, using ads and offers to market their scams. The FTC also states that in the first six months of 2020, consumers reported losing a record high of almost $117 million to scams that started on social media. The largest amount of reports were about online sellers that didn’t deliver the goods. More than a quarter of all scams reported in the first half of 2020 started on social media. About half of all romance scams reported since 2019, started on social media, usually on Facebook or Instagram. The FTC also received reports about spammy social media messages that pretended to offer grants and other financial relief because of the pandemic — but were just scammers trying to get money, personal information or both.
Scammers can hide behind phony profiles on social media. They can try to earn your trust or target you with ads tailored to your interests. But you can out smart them. Here are a few tactics to look out for and strategies to help you avoid falling victim to a fraudster’s ploy.
Phishy websites – With increased marketing emails during the holiday season, scammers are responsible for some of our inbox overload. They send out illegitimate emails made to look like the real ones that retailers produce. These replicated emails could contain malicious links built by scammers to gather your credit card information or ruin your machine by installing a virus. To check links for legitimacy, hover over the link in an email or on social media to see where the link directs you. Check that the URL includes https: identifying that it is a secure page and be sure to avoid purchasing items on a site you have never heard of. Review emails and ads for typos and other mistakes that could indicate it’s inauthentic. When in doubt, your safest route is to directly search a website by typing in the web address yourself via a new browser window.
Free gifts & Ridiculously low-price products - Like emails, fraudsters also target consumers through social media ads. Scammers get your attention by listing products at an unrealistically low price. A product valued at $100 being sold for $10 and free shipping is likely a scam. These products often are delayed or never ship, and there’s no customer service communication to be found. Be cautious of social media promotions, if a deal sounds too good to be true, it probably is.
Fake messages about financial relief – If you get a direct message from a friend about financial aid or relief, call or communicate with the friend outside of social media. Confirm the message was sent by your friend. Scammers can take over an account to try to earn your trust and separate you from your hard-earned money.
Romance scams – There is a post on our blog from earlier this year which provides great insight to romance scams. Social media has made meeting new people so much easier. Don’t be quick to get wrapped up in emotions or too trusting of an online relationship. Especially during the pandemic while a lot of human interaction is based online, beware of a new friend wanting to know personal information or even asking for money.
Purchase protection – While a credit card cannot protect you from all scams, most credit cards provide some type of purchase protection. If you buy online and do not receive the good you purchased, you may ask your credit card issuer for assistance in getting your money back. Purchase protection isn’t normally as reliable when purchasing with a debit card. So, it can be beneficial to make online purchases with a credit card and select a credit card with the best purchase protection. If you do use a credit card, be sure to track your purchases and monitor your credit.
The internet and social media can help us all stay connected during the pandemic. But it’s also where scammers lurk for easy victims. While communicating with friends or shopping online be sure to stay alert for spam. Shop smart, verify websites, and remember if it sounds too good to be true it probably is.
Blog topics:
Fraud Prevention
The MoneyWise Matters blog has a wealth of information about managing money and avoiding fraud. You can look through the complete archive here.