(Average read time 4.12 minutes. Highlights 38 seconds)
For centuries, people have been seeking the absolute single best investment their money, but few ever find it. Read on, I’m going to give it to you here.
But what really constitutes an investment anyway? There’s the dictionary definition of investment:
- The outlay of money usually for income or profit.
- The purchase of property with the expectation that its value will increase over time.
The perfect investment
The ideal investment gives you the greatest return on your money, offers very little risk, and is virtually guaranteed to make you a fortune.
What are your options; real estate, gold, tech stocks? Perhaps something more exotic like beachfront properties in Costa Rica or secret anti-aging cream patents, would suit you. But what about risk? Maybe you’re better off sticking with government guaranteed bonds so you can sleep at night.
Here are some of the historical annual returns of common investments spanning from the late 1920’s:
Large company stocks – 9.8%
Real Estate – 3.38%
Bonds – 5.5%
With the above investments, if you contributed $100, you would earn $9.80, $3.38, and $5.50 respectively at the end of the first year, if the past were predictive of the future, but whenever I have this discussion I have to throw in the obligatory “past performance does not predict future results.” It does give us some data to consider though.
Darren Hardy, publisher of SUCCESS Magazine, said that “Every dollar invested in your personal development adds $30 to your bottom line over your lifetime.” Many have taken this and said investing in yourself yields a 3000% return, but hold on a minute before we get carried away with statistics.
The investment return of personal development is much more difficult to quantify than the historical data of stock and bond markets, but let’s convert that assumption into real numbers for a more accurate comparison.
The productive working years of the average adult span between ages thirty and sixty. Before thirty, most people are in their learning phase and are not usually adding much to their net worth. If you take the $1 to $30 over a lifetime assumption, and stretch it over thirty years, that averages a 12% annual return.
What does this look like when stacked up against other investment returns? Here is what a hypothetical $1000 invested at year zero would grow to after thirty years using the above rates. According to this, there is no single investable asset that provides a greater return than investing in YOU. But what about risk?
I’ve spent my entire adult life studying successful people. I realized early on that if you want to be great at anything you simply study the people who have already done it and model their behavior. This is true of anything from academics to sports.
In the world of “success,” as it relates to money and wealth, there are many examples from history documented in hundreds of books like Napoleon Hill’s Think and Grow Rich and Thomas Stanley’s Millionaire Next Door. There are a few commonalities, but none more pronounced as their investment of time and money in self-development.
“Invest three percent of your income in yourself (self-development) in order to guarantee your future.” Brian Tracy
I spend an inordinate percentage of my income on my personal development. I invest in books, CDs, DVDs, seminars, consulting and private coaching. The more I spend in this category the more I get in return. There is a direct correlation betwen the amount of time, money and energy I invest in self-improvement and the benefits I receive–not all of which are monetary.
“Poor People Have Big TVs. Rich People Have Big Libraries.” Jim Rohn
Only the minority of people ever figure this out. Most things in life are divided unevenly. I often cite Parateo’s 80/20 rule, but I think 95/5% is more accurate. In this example, only 5% of the world understands that investing in self-development is the most valuable investment. Interestingly, income is similarly distributed.
If so many have become successful investing in personal development, why do so few do it? There are a couple of reasons–the first is ignorance. We are taught that learning ends at high school or college, so most have never been exposed to the concept of lifelong learning. They do not know that they do not know. If you’ve read this far, you can exclude yourself from this category if it previously fit.
The Real Risk
The real reason, however, is that it takes work and there is no instant gratification. It’s more comfortable to work eight hours and collect a paycheck at the end of the week. And for the self-employed, the temptation is to devote all of your working hours to your customers.
Few employees take time to work on themselves just as few business owners take time from working IN their business, to work ON their business.
There are two parts to this investing in yourself equation. There is the investment of money in educational products and coaching, but equally important is the investment of your time to learn and implementing the things you learn.
The self-help market is a $9 billion dollar industry including the weight loss products. That is a ton of money spent on self-help, but when compared to the 15 trillion dollar U.S. economy, it’s tiny—only .000006%. In other words, for every $10,000 in U.S. products and services, only $6 is spent on self-help.
The number of people who invest in self-development is very small, but it’s actually much smaller than it appears. I’m alleging that only 5% of the population invests in self-development, but I will take it a step further and suggest that only 5% of those buyers actually use the products and coaching they buy. 5% of 5% is almost nothing. Said without the math, the majority never open the books they buy.
Now it should be clear why the number of people at the top of every field is so small. Very few are willing to invest in themselves to make it happen.
Is there anything you want get better at? It doesn’t matter what it is, I guarantee there are people who have already figured it out and can shorten your learning curve. Maybe it’s golf, public speaking, getting out of debt, a promotion at work, improving your marriage or parenting skills. If there isn’t anything you’re interested in learning, find a book on getting motivated.
I challenge you to do two things. First, try Brian Tracy’s idea and commit at least 3% of your income to improving yourself. It doesn’t matter what format; books, CD’s, or maybe a personal trainer, it just matters that you get started.
Second, the part that really matters, is committing a percentage of your time to working on it. You might block out one hour per week if this is new to you. The key to making this work is to schedule the time instead of waiting until you have a spare moment. That spare moment will never come.
As time progresses and you see results, you can devote more time and money towards your goals. Success can be as addicting as heroin, but without all the nasty side effects.
I hope you’ll share your next improvement goal below. Sharing publicly has an incredible affect at keeping you motivated.
Photo: Road to success