Why don’t people invest?

People don't invest because it usually doesn't feel good. When was the last time you participated in something you don't understand, in spite of it not feeling good?

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:

Money Making Money

I wrote a free email course specif­i­cal­ly for peo­ple who want to get start­ed invest­ing. In it, I will teach you how to get start­ed with as lit­tle as $10 using Stockpile, and then walk you through my unique met­rics designed for you to have fun and stay moti­vat­ed to build a healthy invest­ing habit. 

Course atten­dees can down­load a spread­sheet tem­plate that I’ve cre­at­ed to high­light these met­rics. I even share a tuto­r­i­al that you can use to set­up your own track­er.

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