Free for 90 days: Sign up now and get 90 days managed free after your first deposit. See offer details

Coming soon: our new one-on-one advice packages. Learn more

Now available: our new one-on-one advice packages. Learn more

Get your entire Smart Saver balance managed free for 3 months. Enroll today

Get your entire Smart Saver balance managed free for 6 months. Enroll today

Introducing Smart Saver: You could earn 1.83% with our low-risk investing account for your extra cash.* Learn more

Behavioral Finance

3 Ways to ‘Think Like a Freak’ About Investing

Stephen Dubner, Freakonomics Radio host, shared some 'freaky' money ideas at a recent event with Betterment CEO Jon Stein.

Articles by Betterment Editors

By the Editorial Staff
Betterment Resource Center  |  Published: July 10, 2014

Managing your money well is not about understanding every twist and turn of investing—but understanding how you value your time.

Delegate your money management to someone else if you value your time doing other things, Dubner suggested.

Author and radio host Stephen Dubner doesn’t look like a freak. But when he starts to talk, the ‘freaky’ ideas start flowing.

In a recent conversation with Betterment CEO Jon Stein, the Freakonomics Radio host shared some counter-intuitive notions collected from behavioral economics research: don’t have a credit card (you’ll only accrue casual debt); your brain is conspiring against you to your detriment (so use devices to help set habits); and educational messages don’t work (booooring).

Dubner visited Betterment in early July for a special event to talk about his newest book, Think Like a FreakA number of Betterment customers attended the event at our offices in New York City, and many watched via a streaming webcast.

He also shared insights on what makes for a good investor from a behavioral view. Much of what Dubner said underscores Betterment’s investment philosophy: to make it simple for individuals to invest well while using an optimized investment portfolio under the hood.

think like a freak investing
Stephen Dubner, left, and Betterment founder and CEO Jon Stein discussed Dubner’s new book in an event at Betterment on July 8, 2014.

Dubner’s investing tips:

1) Admit you don’t know everything: “Don’t assume a level of knowledge that you don’t have,” Dubner advised. In fact there is word for this, he said—ultracrepidarian—or a person who gives advice outside the area of his or her expertise. Investing and finance can be complex topics with a lot at stake (your savings)—and if you know that you don’t know everything, you’re a step ahead.

2) Don’t undervalue the opportunity cost of your time: “Every minute you spend on investing, it’s one hour less you’re not doing what you love,” Dubner said. Unless, of course, you dream in basis points. But if you enjoy golf or hiking more than spreadsheets and modeling markets, then assign your time the proper value.

3) Delegate: “Spend your brain power on what you love, and get smart people to do [the investing] for you,” he said. In other words, doing it yourself is a value-losing proposition—if you value the time you spend doing the thing you care about more than the time you spend on money chores. Jon Stein echoed on Dubner’s takeaway, “That’s exactly why I created Betterment,” Stein said. “We manage your investments so you don’t have to.”

Recommended Content

View All Resources
Long-Term Returns Have a Cost, and It’s Well Worth the Price

Long-Term Returns Have a Cost, and It’s Well Worth the Price

We’re investors in the stock market because it has a long, time-tested history of generating big returns for those patient enough to let compound interest work its magic.

Our Evidence-Based Approach to Improving Investor Behavior

Our Evidence-Based Approach to Improving Investor Behavior

Betterment’s rigorous testing helps to ensure that we know what works (and what doesn’t) when it comes to improving design and investor outcomes.

Get All the Returns You Deserve

Get All the Returns You Deserve

We set out to make investing more efficient—and we have. With our platform, your investor returns can get a boost of 2.66%.

How would you like to get started?

Your first step toward a smarter investing future starts here.

Create a Betterment account

Go ahead and join the smart, modern way to invest.

See what we can do for you

Tell us a bit about yourself, and we'll show you the benefits of investing with us.

Get a free investing checkup

Help us get a sense of your investing approach and see how you could improve.

Transfer a 401(k) or an IRA

Move an existing retirement account into a Betterment IRA.

Download the mobile app

Enjoy the Betterment experience anywhere on the go.

Search our site

For more information and disclosures about the Betterment Resource Center, click here. | See our contributors.