Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.This week’s episode starts with a discussion about protecting yourself from fraud, including how to avoid falling victim to a Zelle scam, in honor of Cybersecurity Awareness Month.
Table of Contents
Protect Yourself from a Zelle Scam and Manage Your Investments
Disclaimer: The investing information provided here is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities, or other investments.
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NerdWallet’s Smart Money Podcast
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.
This week’s episode starts with a discussion about protecting yourself from fraud, including tips to avoid falling victim to Zelle scams, in honor of Cybersecurity Awareness Month.
Then we pivot to this week’s money question from Michael, who wrote:
Hi Nerds, thank you for your helpful and entertaining advice. My question is, I have been a buy-and-hold investor for many, many years. So one could say I am a buy-and-hold-and-hold-and-hold investor. Over the years, the portfolio has done relatively well, and therefore, if I was going to make any changes that would be advisable at this time, the portfolio would incur very sizable tax events. This scares me, especially considering potential risks like Zelle scams, because it might be a good long-term strategy, but I may not have a long time. So I have just continued to hold and get old. Not bad, but what would you suggest? Thanks.
Check out this episode on these platforms:
- Apple Podcasts
- Spotify
Before You Build a Budget
NerdWallet breaks down your spending and shows you ways to save.
Our Take on Peer-to-Peer Payment Apps
Fraud has become increasingly common on peer-to-peer payment apps like Zelle. These apps lack the fraud protections of credit and debit cards, making it harder to reclaim lost money in cases of a Zelle scam. If you believe you’re a fraud victim, file a complaint with the Consumer Financial Protection Bureau and your state’s attorney general.
- Limit Transactions: Send money only to people and businesses you trust.
- Secure Your Accounts: Use strong, unique passwords for every account. Consider a password management system to safely store your passwords.
Our Take on Selling Stock
When deciding to sell stock, consider the type of investment account, tax implications, and retirement goals. Selling stock in response to a market dip is usually not advisable, as the market tends to recover. However, for those nearing retirement, shifting to more stable assets like bonds might be prudent, especially while being mindful of potential risks such as a Zelle scam.
- Tax Implications: You may have to pay capital gains tax if you made a profit. A loss can reduce your taxable income by up to $3,000. Taxes can be avoided if you pass down stocks to your heirs.
Our Tips
- Know Your Strategy: Buy-and-hold is generally better than day trading, but you still need an exit plan.
- Consider Your Account Options: Different accounts have different tax implications. Research your account type carefully.
- Evolve as Needed: Adjust your strategy as you get closer to your investment goals. If you need help, consult a financial advisor.
Image Source : Zelle
[Opening Scene: Sara Rathner and Sean Pyles are co-hosting the NerdWallet Smart Money podcast.]
Sean Pyles: Buy-and-hold is a time honored way to invest. But can you take it too far?
Sara Rathner: Welcome to the NerdWallet Smart Money podcast, where you send us your money questions, and we answer them, with the help of our genius Nerds. I’m Sara Rathner.
Sean Pyles: And I’m Sean Pyles. If you want the Nerds to answer your money question, call or text us on the Nerd hotline at 901-730-6373. That’s 901-730-NERD. Or email us at podcast@nerdwallet.com.
Sara Rathner: And as a note, we want to hear as many of your questions as possible, so please send us a voicemail or a voice memo if you can, but email is still fine. No pressure. Also, subscribe to get new episodes in your feed every Monday. And if you like what you hear, leave us a review and tell your friends.
Sean Pyles: In this episode, my regular co-host, Liz Weston, and I answer a listener’s question about buy-and-hold investing. Stick around to the end of the episode to hear our takeaway tips about what to do if you’ve held onto your stocks for too long. But first, in honor of Cybersecurity Month, Sara and I want to talk about how you can protect yourself from fraud.
Sara Rathner: First of all, I did not know it was Cybersecurity Month. I don’t know how to celebrate this. I’m going to go change all my passwords.
Sean Pyles: We’ll get to that, yes.
Sara Rathner: Anyway. So, speaking of Cybersecurity Month, let’s start with Zelle, which is the payment system created by big banks as an alternative to PayPal and Venmo. So it’s been in the news recently because Senator Elizabeth Warren recently released a report showing that Zelle fraud claims had more than doubled at four large banks since 2020, and that losses were on track to exceed a quarter of a billion dollars this year.
Sean Pyles: Sheesh.
Sara Rathner: Yeah, that’s a lot of money guys. And the losses are likely much higher because those numbers don’t include three of the banks that own Zelle. Warren said that those three banks didn’t provide complete information, despite several requests. So that’s bad, but it’s going to get worse because most of the time when people are tricked into sending money to scammers, the banks decide the transaction was authorized and refuse to reimburse the victims.
Sean Pyles: Yeah. Based on data from the three banks, less than 10% of those who reported losing money to a Zelle scam got their money back, according to Warren’s report. And it’s a shame because a lot of people might trust Zelle because it is promoted by their bank, but Zelle doesn’t have the same protections that you would get using a debit card, a credit card or even a good old fashioned check. Often once the money is sent, it’s just gone. Poof.
Sara Rathner: So listen. Sean, you and I, we talked a little bit, and we both use peer-to-peer money sending programs, and they all come with risks. This is not unique to Zelle. But one way that you can protect yourself if you do choose to use programs like Zelle or Venmo or PayPal is to only transact with people and businesses you know well and make sure to verify them.
Sean Pyles: Exactly. And I would say 95% of the transactions that I make on my peer-to-peer payment app are with friends. I’m covering brunch and they’re sending me money or something like that. The other 5% is typically when I’m at a market, and they accept payment through Venmo or PayPal, what have you. In that case, I see them right in front of me. I’m sending the money directly. I know that they are getting it, and I’m getting the product in my hand right then and there. It’s not some nebulous thing I’m getting off the internet and hoping that it all works out.
Sara Rathner: Right. And there are some professionals I hire: pet sitters, handymen, things like that. They’ll take payment from Venmo, which is very convenient for me. But it’s a real person standing in front of you, holding out their QR code on their phone for me to scan and for me to pay them directly, so I always make sure that I am paying the right person — especially if they have a really common name because it is possible to accidentally send money to the wrong person if you sent it to mikejacobs1 instead of mikejacobs2. So, that’s something that you want to know and verify before you send the money.
Sean Pyles: On the other hand, a lot of scammers will try to do things like play on your emotions. We see this a lot with people who try to buy dogs online for some reason. You’ll see a listing for a dog and it will be the one that you’ve been looking for, hoping for, for months and months. And the breeder might demand that you send over a certain amount of money to put a hold on the dog or just buy the dog outright. But the thing is, that dog might not be real, and now you’ve been duped and you’ve sent money that you will most likely not get back, similar to the risks involved in a Zelle scam.
Sara Rathner: This really bothers me as a dog lover.
Sean Pyles: I know.
Sara Rathner: On so many levels.
Sean Pyles: I know. Yeah.
Sara Rathner: Because first of all, don’t bring innocent dogs into your scam. Don’t do that. Don’t buy a dog from a random stranger on the internet. It’s just not a good move.
Sean Pyles: No, and I’m just going to say, it’s another good reason to adopt from a shelter versus buying one online. So, there’s that too.
Sara Rathner: Yes. You should meet the dog before you get the dog, whether you go through a shelter or a breeder.
Sean Pyles: Right.
Sara Rathner: You should know that a real dog exists.
Sean Pyles: But to bring it back to Zelle, know
FAQs
1. What is Cybersecurity Awareness Month?
Cybersecurity Awareness Month is an annual initiative aimed at raising awareness about cybersecurity threats and promoting best practices for staying safe online, including safeguarding against risks like a Zelle scam. It typically takes place in October and involves various events, campaigns, and resources to educate individuals and organizations about the importance of cybersecurity.
2.What are some tips for protecting myself from a Zelle scam on peer-to-peer payment apps like Zelle?
- Zelle Limit transactions to people and businesses you trust.
- Use strong, unique passwords for every account.
- Verify the identity of recipients before sending money, especially if they have common names.
- Be cautious of emotional manipulation tactics used by scammers.
- Avoid buying items like pets online without verifying their legitimacy.
3. What should I consider before selling stocks in my portfolio?
- Evaluate the type of investment account and its tax implications.
- Consider your long-term investment goals and retirement plans.
- Be aware of potential capital gains tax obligations if you’ve made a profit from selling stocks.
- Understand that selling stocks in response to market fluctuations may not always be advisable.
Protecting yourself from fraud, especially in online transactions, is crucial in today’s digital age. Peer-to-peer payment apps like Zelle offer convenience but come with risks, so it’s essential to exercise caution and verify transactions before sending money.
Additionally, managing investments, such as selling stocks, requires careful consideration of tax implications and long-term financial goals. By staying informed and taking proactive steps to safeguard your finances, you can minimize the risk of falling victim to a Zelle scam and make informed decisions about your investments.
For more insights, visit our site at factualhubs. Discover everything you need to know!
