Savers need to be investors; The hazards of mental accounting; Personal finance is a matter of choices; The rewards of hard work; I have a complaint

By Amanda Morrall (email)

1) Time to get off the sidelines?

Larry Fink, CEO of BlackRock Inc. the world's largest asset management firm (with US$3.5 trillion in assets) says it's time for savers to get out of cash and dive back into the stock market, with gusto. Like 100% equities!

During a speech to the Council of Foreign Relations in New York today, Fink (according to this report from Bloomberg) said investors languishing at the sidelines in cash and Government bonds are playing it too conservative and risk short-changing themselves in retirement.

“Most investors need a more diversified portfolio, but virtually every investor has to find ways to achieve a better return than they’ll get in cash or government bonds for the foreseeable future.”

2) Why mental accounting is flawed

Time Money, in this article, takes a closer look at some common financial blind spots and just how irrational most of us are when it comes to money.

Being overly sensitive to losses, relative to gains, (known as loss aversion) and mental distractions are two prime drivers of our bad decisions.

3) Choices

Choice may be regarded as a luxury. It's pretty nice to have options. Seen in that context personal finance is a relatively simple affair; it all comes down to the choices we make. Work, don't work.  Spend, don't spent. Save, don't save. Invest, don't invest. delves into the impact of the choices we face daily as consumers and as author of our own destiny.

4) Working hard

Having just read Timothy Ferris's  Four-hour Work Week, I was interested to see Mr. Money Moustache's review in his latest blog.

Ferris prescribes a bold and clever approach to designing the ideal lifestyle (maximum money, minimum work). Mr. Money Moustache gives Ferris a pat on the back for his bold and cheeky approach to shaving 36 hours of the traditional work week, yet he delivers a more realistic prescription for success; hard work.

5) KiwiSaver complaints

I had someone ring up the other day lamenting the outrageously high fees they were paying on KiwiSaver. They were REALLY high.

What bothered him more was that fact that he couldn't get a satisfactory response from his provider about how they were calculated. This is a common complaint in KiwiSaver and one that the Ministry of Economic Development is looking to resolve with new regulation on universal reporting requirements.

Changing providers is an obvious solution but you can also lodge a formal complaint if you feel there has been a sleight of hand.

Here's a link to the Financial Markets Authority complaint form.

To read other Take Fives by Amanda Morrall click here. You can also follow Amanda on Twitter@amandamorrall

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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1. Why? Why do savers need to have a more diversified portfolio?

I think you can be over diversified myself and not have enough I think its better to be in a few areas but critically, know them well....and be able to move your wealth between them as need be and I think quickly.  Overwise statistically being in lots of or all sectors guarantees a loss...which seems silly.
If you are in say one and it tanks you lose everything....but given that everything is a ponzi scheme right now I think much loss is likely anyway...the finance industry can trade so fast mom and pops have no chance....fols play in that game IMHO.
Interesting that he thinks lots of ppl are in cash....

1.  CEO of blackrock inc is an idiot.....shares I sold 18months ago have all dropped 15%+ since then.....there is no value left in the NZX...

Fink wants your money....