Money, banking & insurance

Buying and selling nothing

On eBay you can buy and sell virtual real estate, virtual clothes and virtual weapons for games like Everquest, Star Wars Galaxies and Second Life - all for real cash (usually paid for via PayPal). A recent example is the case of a 23-year-old gamer (Deathifier to his friends) who spent GB £13,700 on a Treasure Island that didn't actually exist. The island in question did exist in a role-playing game called Project Enthropia and Deathifier made a real-life killing by selling virtual land on his virtual island for other gamers to build virtual homes. He's not alone either. Last year Jon Jacobs paid GB £57,000 for a virtual space station. According to one estimate the value of this virtual economy in real currency terms in around US $800 million and the market shows no sign of slowing down. Indeed, we'll probably see the appearance of virtual real estate agents, virtual insurance and virtual financial planners within the next decade. Okay, that's all very entertaining but what are the real life opportunities for people that spend most of their average day working for a bank or a credit card company rather than inhabiting an online world such as World of Witchcraft or Final Fantasy XI? A bank-run virtual currency trading exchange might be too futuristic, but what about a real credit card that earns virtual currency when you use it for real life purchases? You nominate which currency you want (World of Warcraft EU Gold or Second Life Linden dollars, for example) and every time you by a pair of jeans or an iPod you could earn Warcraft or Linden points. Such an idea could work in other ways too. For example, when you spend real money on virtual clothes for you avatar on eBay you could earn points towards a new personalised credit card with a photo of your avatar on it. That would surely impress the geeks down at the Genius Bar at your local Apple store. Or how about a real life retailer setting up a virtual store where customers could go shopping for virtual supplies such as food and drink (avatars have to eat too you know)? All virtual purchases would obviously earn real-life loyalty points, which could then be exchanged for real products in their real stores. One can even imagine a real airline offering to fly avatars to virtual destinations - thereby earning virtual airmiles - or a virtual currency exchange where customers could exchange one unwanted virtual currency like airmiles for another such as supermarket loyalty points.

Investing in happiness

Money may not buy you happiness, but trying to bring happiness to other people may make you rich. Credit Suisse has suggested that sectors that will benefit from people's quest to achieve happiness can be identified and used for financial gain. Sales of dental implants are set to rise and with cancer treatments improving, the oncology market is expected to double by 2010. Drugs that have a direct impact on a person's mood such as anti-depressants are sure to be a big success too. Closely related are enhancement foods that improve people's natural attributes and nano foods such as fries with calories that are not absorbed. With the population living longer and healthier, they are more likely to spend money on improving their appearance or taking holidays. A longer life expectancy has also promoted growth in the real estate market, with trusts that invest in retirement accommodation booming.

Do you speak my language?

Would you think that the name of a stock would affect its performance on the stock exchange? According to recent studies by psychologists at Princeton University, it does. It was found that people are more likely to buy stocks with memorable acronyms, and stocks with easily-pronounced names consistently sold better than stocks with less memorable ones. So people are willing to take mental shortcuts, even when it comes to investing.

Unfair advice

Once upon a time it was car salesmen and politicians who were the least trusted. Now, according to a recent survey by Mintel (a UK-based market research firm), it's those in the financial profession. When asked who they thought would be likely to deal with them fairly, people rated investment managers among the worst, at only 4% Also ranked poorly were pension companies (7%), sitting on par with traffic wardens and just above real estate agents (5%) and politicians (4%). Other money related professionals that fared a little better were financial advisors (12%), though they were still ranked below lawyers (14%).The only professions held in high esteem by more that half the population were doctors, and even though they came in at top of the list, only 64% of people considered them 'fair'.

Blighted by debt

According to the Citizens Advice Bureau, an increasing number of British citizens are facing a lifetime of poverty and debt. The charity says the number of people seeking advice for financial problems has doubled over the past eight years, and the average amount owed is almost a third more than three years ago, now at £13,000. Those who visit the Bureau tend to have a lower income, earning around half the national average. So to pay off this debt at a rate they could afford would take around 77 years. Des Harker, the chief executive of Citizens Advice, says the main contributing factors are a low income, combined with poor financial decisions - credit card and personal loan debts making up the bulk of the amount owing. The charity has pressed the government to go ahead with plans for the Debt Relief Order, which will help write-off debts for low-income earners.

Debt downunder

It's not just the British that are in debt, but Australians too. Information from debt-recovery company Prushka reveals that more and more young people are becoming bankrupt through the use of mobile phones and credit cards. CEO Roger Mendelson party blames the providers themselves, saying that in their eagerness to do business with young people, they only do cursory financial checks. But demographer Bernard Salt claims it's just the mindset of Generation Y, whose experience with the economy is very different to that of their parents. Growing up in world where everyone has become richer year by year and with no collective memory of the last recession, they have no reason to believe that life won't always be this good. Prushka has found that while people have tightened their belts to allow for increased petrol prices, they have done nothing to curb the use of credit cards, even when facing a rise in interest rates.