The Piggy Bank Factor

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America's
latest endangered species: the piggy bank

In
the days before credit and debit cards, pretty much everyone had
a piggy bank or an empty mason jar sitting on a shelf at home. A
depository for spare change at the end of the day.

Not
anymore.

In
today's world of plastic transactions, we're hard-pressed to hear
jingling pocket change as people pass us on the street. Myself,
I try and pay for everything on one credit card: groceries, gas,
restaurants. Not only is it practical but I get a detailed list
of all my purchases on one convenient bill at the end of the month.

America's
most valuable real estate

Piggy
is an endangered species for another reason: competition. Disposable
and discretionary income is being diverted from the bottom of Piggy's
ceramic belly to frivolous and unnecessary impulse purchases made
at point of sale retail terminals.

The
most valuable real estate in America is not found on Fifth Avenue
or Rodeo Drive; it's the space around America's cash registers.
Studies have shown that the square footage immediately surrounding
point of sale generates over 300% more in revenue than any other
part of a store.

A
multi-billion dollar industry devoted to the pursuit of exploiting
point of sale impulse purchasing has flourished over the past 30
years. Color schemes, eye level placement, display content, and
a myriad of other variables are continually studied, tested and
refined. The sole objective of this Science of Purchase is to determine
how a retailer can most effectively bleed the consumer of his last
nickel when experiencing the most crucial – and most vulnerable
– part of the retail transaction: paying for merchandise at point
of sale.

It
is difficult to track and place an actual dollar figure on what
Americans spend on candy bars, tabloids and other eye-catching merchandise
skillfully and cunningly placed around your convenience store's
cash register. However, thanks to statutory requirements, there
is one category of impulse purchase that we know to the cent how
much Americans waste their hard-earned dollars on: lottery tickets.

Over
$45 billion was spent on lottery tickets in the United States last
year, purchased through 187,000 retailers (of which 133,000 have
on-line lottery terminals). 50% of all Americans played the lottery
at least once last year. Contrast this with the less than $37 billion
a year spent on the positive and beneficial Individual Retirement
Account, contributed to by less than 10% of eligible taxpayers.

With
this kind of competition for America's spare change, what's a piggy
to do?

Piggy
is frustrated

I
contend that the very same piggy bank factor responsible
in decades past for filling up ceramic and tin vessels with America's
spare change still exists today. This predisposition to save
small amounts on a daily basis, this tendency to squirrel
away for a rainy day is, I believe, still very much a
part of everyone's psyche.

Weren't
we all taught from an early age that it's good to save? And don't
we feel good when we do it?

Piggy
hasn't gone away; he's just frustrated. Today's retail environment
doesn’t provide an outlet for our predisposition to incremental
saving to be expressed. Indeed, I am convinced that the piggy bank
factor is just waiting for a channel through which it can
be satisfied.

Investing
as impulse purchase

Why
not use the very same technology that diverts our spare change away
from savings? Why not convert the millions of cash registers, lottery
machines, and credit/debit card swipers into having the capability
to take spare change and direct it into our own mutual fund or IRA
accounts? If manufacturers can make devices that allow us to so
conveniently and easily play lotteries then, certainly, the ability
to invest via the same technology isn’t out of the realm of possibilities.

I
would like to see stock market investing placed on the same level
playing field as the impulse purchase. Investing as an impulse purchase
should become as common as lottery ticket purchasing.

The
cash register at your local supermarket should be reprogrammed so
that the next time you're at the checkout counter and you get a
dollar or two back in change you can instruct the cashier to deposit
that change – using the cash register – directly into your own
investment.

If
state legislatures have seen fit to encourage and promote legalized
lottery gambling, I believe they have an obligation to provide a
positive choice directly at lottery point of sale. Imagine the next
time you're at a lottery kiosk wagering $5.00 on Powerball and the
cashier says: “Mr. Consumer, you now have a choice. You can put
your hard-earned $5.00 on the futility and randomness of a lottery
ticket…or…you can contribute to this year's Roth IRA.
What do you want to do?”

Barriers
to equity investing

Certain
identifiable minorities have historically been underrepresented
in stock market ownership and overrepresented in impulse
purchasing. One of the barriers to higher participation rates in
stock market ownership by minorities is minimum amounts, such as
$5,000 or $10,000, required by financial institutions just to open
up an investment account, something many members of minority and
low-income communities simply can't or won't do. By contrast, the
unit price of $1.00 has never been a barrier to playing the lottery.

Equity
investing should be made just as easy.

April
4, 2005

Tony
Kondaks [send him mail] is
an inventor and entrepreneur who lives in Mesa, Arizona. His websites
are located at: www.posfi.com
and www.lottostocks.com.

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