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:
Let me know what you think