The Young and the Riskless; Virtual financial advice; Five ways investors hurt themselves; A silver lined bubble in waiting?; Don't get cooked by your utility co.

By Amanda Morrall

1) Youth, time and risk

If youth is wasted on the young, then so too are all the juicy returns they could have earned by investing sooner rather than later for retirement.

Compounding interest is truly a thing of beauty. 

An obvious downside to being young is you usually don't have much money to buy bread let alone invest and yet even $10 a week in babysitting money could go a long way.

There is understandably a fair degree of scepticism today about investing and whether the long-term returns touted by advisers will materialise. Even those under 30s who are invested are dialling back on risk,  trading equities for a higher proportion of cash.

According to this piece from the Wall Street Journal, 40% of investors in their 20s surveyed about their attitudes towards risk and the market, agreed with the statement: "I will never feel comfortable about investing in the stock market.''

Financial advisers in the US, and elsewhere, say this is worrying because young (and even not so young) investors run the risk of having insufficient savings when they get old by virtue of missing  out on higher returns from equities.  

But that's what state pensions are for right? Don't count on it.

2) The future of financial advice

I don't have exact numbers but since the new regulatory regime was introduced, a major cleansing has taken place.  The financial advisory sector has shrunk, considerably.  The Financial Markets Authority originally anticipated registration upwards of 5,000 financial advisers, but has approved about half that. (See also this article on new designations for advisors).

Anecdotally, many (already close to retirement age) used the new regulation as a reason to close up shop. The time, expense and administrative effort involved in making the switch to become an authorised financial advisor also contributed to the cull in numbers.

On top of all that the financial advisory sector is undergoing a reformation that will overhaul practices world-wide.  The move away from commissions towards a fee-based service is playing a big part.

This piece by monevator.com looks at three possible incarnations for advisers, all of them featuring online aspects. This is well worth a read but here's an excerpt.  

The question is, what will the next generation of direct offerings look like, and will they engage, educate and inspire the average ‘mass affluent’ consumer?

Consumers are today presented with a bi-polar choice. They can either take matters entirely into their own hands, spending significant time (months?) learning about investments before visiting an online brokerage (as many readers of Monevator will do), or they can delegate everything to a financial adviser who they meet maybe once per year.

For the average consumer, who is used to fast, efficient and engaging online solutions, neither prospect is particularly appealing.

Perhaps the best indication of what the future has in store for internet-savvy consumers comes from the new wave of tech-based start-ups.

The approach these companies take to online financial advice falls into three categories:

1. The Virtual Adviser – Online tools that seek to replicate what financial advisers do today. Discover, educate and advise.
2. The Remote Adviser – Leveraging technology to connect financial adviser and client, regardless of location.
3. The Social Adviser – Crafting online communities capable of educating and advising one another.

3) Five ways to lose your money investing

Financial advisers in NZ cop a lot of flack. I don't doubt there are some bad ones but they're used all too often as a scapegoat for investors who couldn't be bothered to do their own homework and research.  

Wealthpilgrim.com details five ways that investors cost themselves.

No.1? Failure to launch.

4) Silver bubbles

Is silver the next bubble to burst? Squirrelers.com explores.

5)  Cooking with gas

This personal finance blogger's utility rage episode, reminded me of my own last week. The disparity between my summer and winter power bill has been so massive I've been casting suspicious looks at my neighbours wondering if they might be channelling my electricity for a home grown-op. As I haven't plugged in a heater in weeks I had to make the obligatory WTF call.

Turns out their estimation was out $70 in their favour.  This whole estimation business doesn't sit right with me. Was the kick in the butt I needed to read and phone in the metre numbers myself every month.

What made me more annoyed was the fact that the phone centre operator didn't alert me to their own money saving programme.

After reading through the paperwork that came with bill (okay I confess I normally rubbish it) I figured out I could save myself $160 or so a year by going on a small household use plan. I rang back and switched plans.

Unfortunately I didn't have the change to ask why it wasn't suggested in the first place as I got a different operator and didn't want to unleash on her.

This link's for you Genesis. The OECD's new policy on consumer protection.