Tag Archives: investment

Invest in yourself

For a long time now I have been convinced that financial investments are inferior to investments in one’s skills, knowledge and capabilities. Initially it was just a hunch, a by-product of my worldview. But the more I thought about it, the more it became clear that investing in myself made more sense than investing in financial assets. The aim of an investment is to achieve some return, benefit or gain in the future. In essence it involves limiting one’s current consumption possibility frontier in order to increase one’s future consumption possibility frontier. This is all very general, abstract, and theoretical, i.e. wonderful. 

As the times have changed, our notions of what is valuable have also changed. Where previously physical assets were the be-all and end-all of wealth and power, our current system runs along the contours of knowledge and information. Whenever I doubt this truth I remind myself that one little piece of technology the size of a coin (USB stick), with one little virus coded in ones and zeros has the potential to send the entire world into chaos. This has never happened, thankfully, but you don’t have to be a futurist to know the devastation that could be caused by a virus that randomly reallocated wealth, and since the majority of the world’s wealth is measured with digital placeholders – not land or gold or something tangible – this is entirely possible.

This is true of the world, but it is also true of the individual. Your most valuable asset is your brain, the repository of your skills, knowledge and capability. You can invest in bonds and stocks and try and secure your financial future in that way, but a more reliable and rewarding way is to invest in yourself. If you lose all your financial wealth and your possessions vaporize into the ether, you will still have your brain and the skills you have acquired, unless you are dead in which case it doesn’t matter. I’m still working on the mental-disability critique (perhaps take out insurance?!). If you accept that you are your most important asset, then you should spend your money in such a way as to grow your range of skills, knowledge and capabilities. That includes most books, meaningful travel, new courses, and self-study – these are INVESTMENT expenditures, not CONSUMPTION expenditures. Mistaking these two leads to sub-optimal allocations of income. Next time you invest in a financial asset, do so with the explicit reminder that you are implicitly saying that the return on that financial investment is more than the return on investments in your own skills.