You’re much more likely to become wealthy investing in your own ability to generate future production than you are by buying an asset that was actually someone else’s investment.
- Cullen Roche
Luke, being a securities analyst for the past three years, and I, having my Series 65 License (Uniform Investment Advisor Law Exam), frequently deal with a dizzying array of investment options and choices. There are literarily thousands of different investment options, all with varying risk-reward tradeoffs. While our roles are slightly different, Luke and I often sort through this barrage of choices to discern what is most appropriate given one's investment goals and financial objectives. However, there is only one investment that we recommend for everyone in every scenario - investing in themselves.
When people first hear of our profession, they often ask "What should I invest in?" Usually the answer is "It depends." Despite this, there is one piece of investment advice that we will give to everyone regardless of time horizon, risk tolerance, cash available, liquidity needs, etc. That is, "Invest in yourself."Whether that is spending money to attend an industry conference, buying a review package to study, or simply ordering Malcolm Gladwell's new book, investing in oneself involves making efforts, both monetary and non-monetary, to expand one's mind.
Now this is not meant to be a rainbows and butterflies and unicorns and 'everyone can succeed!' type post. Rather, it is meant to be general advice on a specific observation regarding the wealth accumulation process. There are two main parts to increasing the bottom line on your brokerage account - 1) your investment return and 2) how much you actually invest i.e. the amount of funds you save towards your account, whether that be through dollar-cost averaging or some other technique. Saving 2 percent of your gross income and earning a 15% annual return is not the same as saving 20 percent of your gross income and earning a 10% annual return. So how can one have more funds to invest and still live the lifestyle they want? The simple answer is make more money. Easier said than done, but through the aforementioned strategy of investing in oneself, one can greatly increase their earning potential.
Now this is not meant to be a rainbows and butterflies and unicorns and 'everyone can succeed!' type post. Rather, it is meant to be general advice on a specific observation regarding the wealth accumulation process. There are two main parts to increasing the bottom line on your brokerage account - 1) your investment return and 2) how much you actually invest i.e. the amount of funds you save towards your account, whether that be through dollar-cost averaging or some other technique. Saving 2 percent of your gross income and earning a 15% annual return is not the same as saving 20 percent of your gross income and earning a 10% annual return. So how can one have more funds to invest and still live the lifestyle they want? The simple answer is make more money. Easier said than done, but through the aforementioned strategy of investing in oneself, one can greatly increase their earning potential.
Do not hesitate to spend money on things that will improve your knowledge. Just as the definition of investment implies, one gives up something in order to achieve something else - in this case a broadened horizon, expanded circle of competence, or wider professional network is the potential return. This does not mean it is ok to waste money on any passing desire of material gain; rather, investing in oneself involves the same due diligence that is required for a financial investment. However, even though it still requires choosing certain things over others, what is different about investing in oneself is the fact that you will get out of it what you put in to it. Investing in yourself is in your control. The stock market is not. As a result, with dedication investing in oneself can have a guaranteed return.
Allow me to connect the dots to clarify what this post is getting at. There are two components to your investment account bottom line: the amount you save to invest and the return you get on your investments. The amount you save to invest is in your control which is correlated with how much money you make. This can usually be increased by improving oneself which involves investing in oneself. The return you get on your investments is not in your control. Therefore, it may be wiser to concentrate on improving earning capacity in order to save more rather than trying to identify the next hot stock.
-Joe
Allow me to connect the dots to clarify what this post is getting at. There are two components to your investment account bottom line: the amount you save to invest and the return you get on your investments. The amount you save to invest is in your control which is correlated with how much money you make. This can usually be increased by improving oneself which involves investing in oneself. The return you get on your investments is not in your control. Therefore, it may be wiser to concentrate on improving earning capacity in order to save more rather than trying to identify the next hot stock.
-Joe
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