Applying the logic of web site structure and internet information architecture to make better savers and investors out of us!
I am fascinated by the intersection of ideas and technology, much like how the Freakonomics guys merge economic data with crime stats and car seat fatalities to shine a brighter light on how we actually behave. Today I learned about some research being done in financial services with the goal of creating incentives for us to be more self-reliant in retirement. Researchers such as John Padgett have demonstrated “increasing autonomy” as a fundamental market behavior going back to the Renaissance in the 1500’s, and I see this as one more step in the development of human consciousness.
In the NYTimes article, Some Novel Ideas for Improving Retirement Income
By Jennifer Saranow Schultz , I really like the third suggestion, Tangible Mental Accounts:
Researchers have also shown that people tend to divide their money into separate mental accounts for various purposes (think travel or dining out) and that earmarking savings to specific goals (college savings, for instance) tends to increase saving rates.
It is practical and outcome-oriented. With technology becoming every more user-generated, robust, and customizable, it would be great to have an investing account that allowed the users to categorize their assets in this manner.
Best of all worlds for me is to have one umbrella account with the “sub-accounts” to be arranged by me and adjusted over time. That way I have the convenience of seeing the bottom line yet the incentive to target savings based on my preferences. Very much like having a blog, where I can see the total number of articles in the admin, and can create my own categories and update them in real time as my interests develop.
The article also suggested being able to have different investment strategies for different goals – much like you could put more risk into a less important goals in hopes of getting lucky but not devastated if you don’t reach it. And use a secure, safe strategy to cover those “must-haves” for the imagined future.
We could also experiment with a type of tagging – one of the many useful tools that the internet has given us. Instead of filing a piece of information in one folder, it can now be in one main folder, tagged with descriptive keywords so that we can easily find it later. Tagging money in selected accounts might also help us feel more connected to our savings and therefore be more active in the process. What I am getting at is there is a logic already in place that could be applied to investing with great results and without having to completely re-invent something.
Hat tip to George Lowenstein, professor of economics and psychology at Carnegie Mellon University, for thinking along these lines. I so appreciate all the great minds and programmers who are working on our behalf all day every day. While there is plenty of so-called bad news, I tend to see enormous positive trends and the ones that rely on self-reliance are some of the most interesting. What about you?