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Are Too Many Investment Choices Hurting Your Financial Well-Being?

One of the key inputs into Scripbox came from the world of behavioural economics or study of how human emotional and social factors affect economic decision making.

One of the key inputs into Scripbox came from the world of behavioural economics or study of how human emotional and social factors affect economic decision making. Surprisingly in a subject driven by numbers and data, people don't always make rational decisions based on numbers and data. Chief among our guiding lights was a book - The Art of Choosing by Columbia University Professor Sheena Iyengar - on the psychology of decision-making.

In this book, Ms. Iyengar cites an experiment conducted with the investment management company Vanguard and 401K plans offered by them in the US.

10 per cent fewer people participated when they increased the number of available plans from 5 to 50!

Ms. Iyengar goes on to conclude that more choice leads to less decision making. Simply put, people are so overwhelmed that they defer the decision - sometimes forever.

This finding has big implications for mutual fund companies but it has an even bigger implication for investors. This becomes clear when you recognize that besides giving up one of the most tax efficient and easy investing vehicles, people were also, in some cases, turning down an upfront tax break.

People who made up that 10 per cent in the above study were harming themselves financially - and all because they were faced with too much choice.

This insight became our call to action and Scripbox was born. We make investing simple by reducing choices, so that more people can secure their future.

We would love to hear from you if this is a step in the right direction. Do you feel that you are being overwhelmed by the number and complexity of choices available to you?

Feel like you need a PhD to invest in mutual funds? Not with Scripbox!
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