I like to lurk on Quora and Reddit, because there are some amazing questions being asked, followed by amazing answers being given. One of the most popular questions people ask is,
“I have $X available to invest, what should I invest in?”
The answer that usually gets upvoted to the top is the right one:
If you want the largest return on your money, invest in yourself. Nothing else will net you an ROI that comes anywhere near the dollars you put into self-development.
Despite what you might believe, investing in real estate will not make you rich. Neither will the stock market. I know that sounds weird coming from me, but hear me out. Those are just vehicles where you can put your money and net a few percentage points, maybe 5% or 10%, even 30%. Possibly more, if you wait and wait and wait (it’s a long time to wait). When it comes to money, the in-flow matters more than the out-flow. So bolster the in-flow.
So always invest in whatever increases your future earning potential, improves your productivity, or inspires you to strive for bigger goals.
It’s easier to have a million dollars in the bank if you earn the million dollars rather than if you just wait for it to grow. Sure, you can put $10,000 per year away for X number of years until compounding interest delivers magical number appears on your bank account statement to let you know you can retire. Or you can scale up your earnings efforts right now.
It’s taken me awhile to make peace with the fact that I’m probably not going to make my fortune in stocks.
As a newly minted Finance MBA, this seems contrarian to everything I’ve been working towards over the past 2 years. But I earn more at my day job than I currently do in the market, and my employment income is likely to exceed my investment income forever — or at least for the next three or four decades. This realization has forced me to refocus my efforts from trying to make my money on my investments, to trying to make my money from my work. I’d rather focus on increasing my income from my work by 5% than trying to increase my passive investment income by 200%.
But how do you get more money out of your primary income sources? By investing in:
- Your heart
- Your mind
- Your soul
Anything that improves your skills, increases your motivation, or even just makes you appear more hireable is 100% worth putting money into. The ROI on something you spend money on isn’t always immediately apparent. Almost all the income I’ve made in the past 4 years stemmed from one $25 investment.
When I was 25 years old I paid $25 to the Career Centre at my university to review, edit, and give feedback on my resume. I had been applying for jobs for months and hearing NOTHING back, leaving me feeling dejected and helpless in adulthood. I had known about the resume review services for awhile, but I couldn’t stomach spending $25 on something so frivolous — hello? I was unemployed! And what if they didn’t even give me good advice?! After reading What Color Is Your Parachute?, I finally understood that the purpose of a resume is to get you a job interview, so I decided to invest in my resume in order to get some call-backs. The response was immediate. The calls turned into interviews, which turned into job offers. Within a few weeks I had an incredible job with a $50,000 salary. I don’t think I’ll ever get a $49,975 return on $25 ever again, but that time I did. I wrote them a thank-you letter that was probably barely legible in my excitement about my whole new life.
It was so little. But had such a big impact.
Ever since then, I’ve never shied away from spending on anything that could potential improve my income. My MBA was a big investment, which is expected to take 3 years to pay-off, but it qualified me for a higher salary for the rest of my life. I’ve bought books (so many books) on every topic under the sun, from setting goals to growing a small business. I’ve purchased online eCourses to help me learn new skills. Forget about spending on new clothes, dinners out, or whatever else, my main focus right now is spending on whatever has the potential to make me richer for the rest of my days.
What can you invest in that will pay dividends for the rest of your life?
Improve your talents.
Know what’s a good freakin’ use of your money? Nourishing your passion, and then charging for it. We don’t all have the luxury of working remotely from a beach in Tahiti, but that doesn’t mean we can’t all spend a little bit of our day wrapped up in something we truly love and sharing our gifts with the world for profit. Talents can be wildly profitable, particularly if you have an in-demand skill, so don’t shy away from honing whatever you’re good at and then charging for it.
I love hiring my super talented friends to help me with a project, whether it’s web design or photography. I am skilled in neither realm, and it is so so so much easier to just pay someone for something amazing than stumble through it myself. I get incredible work, and they get a few extra $$$. Everybody wins.
Suggestions: take a cooking class, become a yoga instructor, take a photography course
Improve your skills.
Can’t do something? Learn it. Pay to learn it. Learn to code, learn to write, learn to invest. Learn whatever you need to in order to get a better job, earn a side income, or manage your money. Heck, go back to school, the time is right freakin’ now. You’re only getting older, and every day that passes is one less that you’re not earning more money. This is one of the reasons I created the Master Class Money investing eCourse — say you have $5,000 to invest and can contribute $100 per month for the next 40 years (until you retire). Putting that in a savings account at 1% will only give you about $66,000. Investing in the stock market at 5% (and that’s a low-ball estimate!) will give you over $180,000. That is so powerful!
Knowledge is something no one can ever take from you. Want an endless return on your investment? Invest in learning something new that will benefit you, forever.
Suggestions: learn social media marketing, take a class on HTML, take a writing class
Change your mind.
I’m working on changing a number of my perspectives right now. It’s annoying as all hell. For a long time I held a lot of misguided beliefs about myself and other people and the world in general. I had a to of limiting world-views I carried around like rocks in a backpack, weighing down my every step. Do you know how much harder it is to climb a proverbial mountain with a backpack filled with mental rocks? Unnecessarily, impossibly, ridiculously hard.
It’s taken me at least 5 years to remove some of the heaviest rocks from my imaginary knapsack. The ones that say things like, “you do not deserve to earn $X amount per year” and “you are not qualified/intelligent/hard-working enough to get an MBA/run a company/advise entrepreneurs”. When you finally get to pulling these out of your bag and throwing them out behind you, you can’t help but think, “holy shit what the hell was I doing carrying around these stupid rocks???” and you feel really dumb about it for a very long time. Bonus points if you realize you were also climbing the wrong mountain, too.
It’s for this reason I’ve gotten over the hurdle of paying for advice and education from people who can help me shed the unnecessary weight of my perceived inadequacies. I don’t mean therapists (though if that’s what’s going to help you get unstuck, do it), but I’ve learned the value in paying to learn from someone who knows what I want to know or does what I want to do. If you want a shortcut to success, ask someone that’s already where you want to be. If they want money for their talents and knowledge, pay them. They deserve it, and so do you.
Suggestions: hire a life or business coach, take an eCourse from someone you admire, spend vacation day from work to listen non-stop to the Tim Ferriss podcast.
Start a side hustle.
Want more money? Create a business. It doesn’t have to be a big one, and it doesn’t have to be enough for you to leave your 9-to-5, but imagine for a second what you would do with an extra $5,000 or $10,000. Big things, right? That’s why you should find a way to create a second income for yourself, even if it’s small. Use the suggestions above, and make it into something that pays. The harder you hustle the more rewards you’ll realize, and it’s possible your side business might even grow to something you can do full-time.
Suggestions: find a creative niche and just do you. Seriously, that’s it.
You’re not going to make your money, your real change-your-life money, on your house. Or your investments. You’re going to make it right now, day-in and day-out, with however you choose to spend your time. So spend your time, and money, wisely by investing in yourself and your future earning potential.