In this blog, I have talked a lot about different investments you can make to grow your wealth – stocks, index funds, bonds, real estate, crypto currency and so on. But today I want to talk about the ultimate investment that beats all of that. I probably made that sound click-baity. So here goes! – the best investment you can make is by investing in yourself. I have talked about this briefly in my article on creating long lasting wealth. If you are reading this and groaning inwardly and saying, “Just tell me what to invest in. Don’t bore me with a lecture on educating myself!” My response is two fold – one, creating wealth is not easy. It requires a lot of dedication, hard work and dedication; two – as the saying goes, I would rather teach you how to fish rather than giving you the fish. I am going to keep this article shorter and simple. As always, I will provide a framework on how to think about this.
What does investing in myself actually mean?
Someone once told me they were buying themself really nice shoes and said he was ‘investing’ in himself because he needed to pamper himself :). Just to be clear – that’s not what I am talking about here. I am talking about investing in educating yourself and building skills. Specifically in this context, doing all this in the context of learning how to build wealth.
Investing your time
Most people think of investing in themselves in terms of $. However, the biggest investment when it comes to investing in yourself is investing your time. People say time is money. This is fairly obvious but probably the biggest difficulty when it comes to doing this. How often have we heard people say they don’t have time to do something? So, fundamentally this comes to aligning your priorities and your time. Believe me – I am someone who loves watching Netflix and could do that hours together. But as I embarked on this journey a few years back, I was extremely motivated to learn more and so this became more interesting than watching Netflix. So the first and most important mental shift to make here is to know that you are willing to put the time in to do this. This will be the biggest investment you need to commit to.
Where do I begin?
But this does not necessarily mean investing money to go and get yourself a CFA or CPA certification or attend a 2 day workshop. They are all reasonable ways to invest in yourself btw. But before you do any of that, begin with the end in mind. What are you looking to accomplish? If you are just starting off and are unclear of your goals, then just start with something simple and allow it to evolve over time. When I first started, all I wanted was to figure out how to invest all the money I had saved in my checking account. Then, over time, it evolved to learning how to become financially independent and creating passive income. As I stumbled into real estate as a method to create passive income, I started reading a lot about it and listening to podcasts. But I recognized that I needed to get a more formal grounding on it. So I ended up taking a course that helped support that. Starting with the end in mind will therefore help you understand how you need to get there.
The learning framework – how should I learn?
Once you have an understanding of that, you can lay out a plan for how to invest in yourself. This plan can and will evolve over time. The organization I work for has taught me this framework for development. It’s the 70-20-10 framework. 70% of the learning happens on the job, 20% through mentoring and from others, and 10% through more formal means like a course or a workshop or a book. I have appreciated this framework because I have come to understand that you don’t actually learn something by simply reading about it but you need to go and actually do it.
The 10% formal learning
A lot of people place a lot of emphasis on formal learning to feel competent. I totally get it especially when you feel like you don’t even know the basics. But one of the things I have realized is that in this era, there are so many ways to learn that don’t involve going out and getting a formal degree or certification. I am not for a moment saying you don’t do it but all I am saying is that don’t over-emphasize this aspect of learning over doing something and trying it out. If you do that, the entire activity might feel too daunting and you might give up even before you begin. I learnt a lot through books and podcasts. I listen to many different podcasts every single day. The challenge with that kind of learning though, is that you need to organize a lot of the information in a way that allows you to understand how all the information connects to each other. The nice thing is – all this information is free.
The 20% – learning from others
Someone once said – you are the average of the 5 people you surround yourself with. You need to be particular about who your mentors are and once you have gotten comfortable with the person(s) you are learning from, you should be like a sponge. I would also say don’t stick with listening to only one person. Listen to multiple viewpoints and form your own. I listened to a lot of different podcasts, talked to a few different people including my financial advisor to finally form some opinions of my own, a lot of which are reflected in this blog.
The 70% – learning by doing
Finally, none of this learning is going to be complete without actually doing it. So I could learn all I wanted about real estate by listening to people and taking courses, but my true understanding of it did not happen until I went and did my first deal, and then my second and so on. Each time you do it, you learn something new. That’s what gave me the most confidence to round off my learning. Now, this feels obvious so why am I mentioning it? While this is most obvious, I mention this because a lot of people don’t actually do this because of either analysis-paralysis or simple inertia to go do it. Some people may be just too plain scared. When it comes to money, most people feel they need to be careful and I completely understand that. That’s why you learn the fundamentals first by reading, listening and talking to people. But once you have done that, then you should go try it out. Because you will make a few mistakes that will help you tweak your approach or maybe even fundamentally change it. Of course, some might fall flat on their face but that means you need to revisit your learning and understand what went wrong.
Teaching is the best form of learning
You know what really cements all the learning you have made? When you actually start teaching others what you have learnt. That was the culmination of this blog. While I don’t know if anyone actually learns anything from my blog, I can tell you this – I am learning a lot more about personal finance by blogging about it. And that’s why I blog religiously because a) I enjoy it but b) it really cements my learning. This blog is a true summary of everything I have learnt.
Concluding comments
Investing in yourself is the biggest gift you can give yourself and the best investment. Alternatively, think of it as the best insurance policy you can buy against difficult times. The knowledge and skills you gain in learning how to manage your money will help you in both boom times and tough times. As you have heard me say this before – ultimately this is not about making money. This is about making sure you have enough money to not have to worry about it so you can focus on the things that matter more in your life.
Thank you for reading and I wish you success in your financial journey.
Disclaimer: I am not a financial advisor and all the information in my articles are from my personal experience and are for informational and educational purposes only. Please consult with a financial advisor or CPA for professional advice.
