What to do if you’re a victim of bank account or credit card fraud + MORE Jan 8th

Welcome to CB’s personal-finance advice column, Make It Make Sense, featuring Ben Reeves, the chief investment officer at money-management platform Wealthsimple. Each month, Reeves answers reader questions on complex investment and personal-finance topics and breaks them down in terms we can all understand. Have a question about your finances? Send it to editor@canadianbusiness.com.

Q: With the markets feeling so risky, is it even worth investing right now when I can get five per cent interest in a savings account or GIC?

I’ve gotten this question a lot lately, and it’s quite reasonable. For the first time in 15 years, you can earn enough interest on your cash to outpace inflation. With most portfolios losing value in 2022, a guaranteed five per cent return in a high-interest savings account can be incredibly appealing. But keeping your money in cash is a short-term solution that can get in the way of long-term wealth building.

If you can’t take on any risk—say you need your money for a downpayment on a house in a few years—cash can be a good option…

Ask MoneySense
We have been defrauded of over $20,000 by someone who was able to make unauthorized e-transfers from our bank accounts. The bank has recovered a small portion of them, and it has refused responsibility for any more. I am at level three of the complaint process, and I am wondering how to proceed?

Do I need a lawyer now, before filing the new complaint?

My home insurance doesn’t cover anything. I have contacted the credit bureaus and I’m making a police report.

—William

How to deal with financial fraud

Sorry to hear about this situation, William. Any fraudulent activity in your financial accounts can be unnerving. But knowing someone was able to access your bank accounts directly is really intrusive.

Interac e-Transfer is generally a safe way to send money in Canada. In fact, “for every $100 spent across the Interac Debit and e-Transfer networks, less than $0.02 was lost to fraud [in 2021],” according to Interac.

Regardless, fraud happens…

Ask MoneySense
I will be receiving CPP and OAS as of June 2024. I intend on working one more year until I reach 66. My question is: Should I put all my CPP money into an RRSP to shelter it from tax? Or should I pay the tax on it and invest in a tax-free savings account?

–Gary

Where to put retirement income: RRSP or TFSA

Gary, believe it or not, it doesn’t matter if you contribute to a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA). You get the same (after-tax) results. Well, almost.

But, before we go there, are you aware that you don’t have to start your Canada Pension Plan (CPP) benefits and Old Age Security (OAS) at age 65? Let’s do a quick recap on delaying CPP and OAS, and then tackle your RRSP versus TFSA question.

Should you delay CPP and OAS to after 65?

CPP benefits increase by 0.7% for every month delayed past your 65th birthday, working out to an annual increase of 8.4%. Plus, the CPP benefit is based on the average yearly maximum pension earnings (AYMPE)—the maximum salary amount on which you need to contribute to the CPP—over the last five years…