Why don’t people invest?

Pause. Clear pre­con­cep­tions. Then ask the void… why don’t peo­ple invest?

Let’s even nar­row the audi­ence of peo­ple. People who are edu­cat­ed, with a job, and with some mon­ey to invest. Yet still, why don’t they invest?

Many com­pa­nies have a lot of mon­ey rid­ing on the answer to this ques­tion. Their answers… more tech­nol­o­gy. More access. More options. More prod­ucts.

More. More. More.

But it’s not about more.

People don’t invest because it does­n’t feel good. Investing sucks emo­tion­al­ly.

Investing has its own arcane lan­guage. Many have to ask for help because we don’t learn about invest­ing at home. The rules are opaque. And, even when peo­ple do invest, they have no idea how to “invest bet­ter” except by blind trust that it’ll work out in the end.

Considering that most finan­cial edu­ca­tion plays to fea­tures not emo­tion, it’s no won­der that the ben­e­fits of finan­cial tech­nol­o­gy and inno­va­tion have accrued to the pro­fes­sion­als.

We see the same thing in tech­nol­o­gy — com­pa­nies focus­ing on fea­tures, not emo­tion. Empathy and expe­ri­ence are big ideas in the tech­nol­o­gy vocab­u­lary late­ly, and hope­ful­ly they make their way to the finan­cial offer­ings com­pa­nies bring to mar­ket.

What? You want an exam­ple of how empa­thy and emo­tion can help peo­ple get start­ed invest­ing, peo­ple who oth­er­wise have sat on the side­lines? Funny you should ask, I’ve writ­ten a book about just that top­ic. It’s avail­able on both iTunes and Amazon.

Fundamentally, the ups-and-downs of one’s port­fo­lio val­ue is dif­fi­cult for many. We know the habit loop of trig­ger-habit-reward… TLDR; a habit that is reward­ed is rein­forced and tied to a trig­ger. When a habit is not reg­u­lar­ly reward­ed, it’s real­ly dif­fi­cult to estab­lish the habit.

When we invest (the habit) but at the end of the month we have less than when we start­ed, that’s not reward­ing. Most peo­ple would answer this with the advice to “not look” at your state­ment. Ridiculous. You know it’s there! Besides, advice to “not do some­thing” is much hard­er than pos­i­tive “do some­thing” advice.

Instead of look­ing at the state­ment bal­ance, why not look at some­thing rein­forc­ing? Like your pay­check. And raise. Look at this com­ment from one read­er:

This habit loop is fun­da­men­tal to our human devel­op­ment. When a moth­er’s love is unre­li­able, our brains don’t devel­op prop­er­ly. When the con­nec­tion with a moth­er is unre­li­able, we learn not to con­nect with oth­er peo­ple. Deep, huh? (I high­ly rec­om­mend this book if you’re inter­est­ed in more on this top­ic. It’s fas­ci­nat­ing stuff.)

In any case, if a book is too big an invest­ment in your finan­cial future, try my free email course first. It’ll help you make your first invest­ment and walk you through set­ting up a spread­sheet to track pos­i­tive met­rics to empow­er you and keep you moti­vat­ed: