Investing in Yourself Is the Best Financial Decision You’ll Ever Make

The best investment you can make is in yourself, period.

Don’t be stingy with your money when it comes to improving your skills. 

Let’s look at why investing in yourself is easily the best choice you can make.

 

Investing in yourself makes the most money

Investing in yourself isn’t just a fluffy mantra spouted by self-help and business gurus; it’s literally a better return on your money than other investments.

Let’s take a look at the actual numbers. Suppose you’re looking to make $10,000, and you tried to make that amount through the traditional investment routes. In that case, you’d have to put up about $100,000 since most index funds, on average, return about 10% a year.

If you have a bunch of capital, it makes sense to invest this way, but most of us aren’t rich yet. We are trying to get rich. Investing and making passive income gets great long-term results. Still, it doesn’t provide ROI as quickly as investing in yourself.

You can make that same $10,000 by investing in something that teaches you a skill to make $10,000. Let’s say you take an online course about a skill that can help you make money online, like copywriting. Maybe you spend $2,000 on a course.

In no time, you’d see that return on your initial investment. You can easily make that much money as a freelance copywriter in less than a year. Also, instead of getting a 10% return on your money, you’d get a 500% return on your money, or 5x.

Even if you managed to amass an amount like $100,000, you’d still be better off investing that money into learning a new skill, getting consulting or marketing help for your business, and even hiring employees. Passive investing is great, and you should do it. But much of your capital should first be invested in helping you grow.

 

Some examples from my own life

I don’t speak about these returns from theory. There are examples from my own life that show you the power of investing in yourself.

For starters, I bought a program called Self-Publishing School that teaches you how to write and publish your own books online. I spent $750 on it. To date, I’ve made more than $75,000 from my book sales alone. That’s a 100x return on my money or 10,000%.

Additionally, I purchased a blogging course that teaches how to write persuasive articles online. I paid $197 for the program. I used that knowledge to write articles on Medium that have helped me earn more than $430,000. That’s a 2,182x return or 218,200%.

After using both programs to build a full-time business with writing, I’ve taken on several business coaches. I recently hired a coach for $10,000 per year for two years running, and I’ve made more than $100,000 from course sales since then. My coaching contract lasts until October, so I still have time to add to the more than 5x return I’ve already made from hiring a coach.

I’ve also invested in areas of my business that can save me time and help me grow. If I need design or programming work, I hire a contractor. I do the same thing with any major project, like books. I’ve hired people to run advertisements for me, be personal assistants on projects, and perform tasks for my business that I don’t need to do.

This increases the bottom line for the business and gives me more time to think of new ways to make even more money. See how this works? The more you make, the more you double down on yourself and your business. This makes you more money, which allows you to double down again and make even more.

With a small amount of capital, you can create a virtuous upward cycle that helps you level up your life and career. Let’s look at a few more reasons why investing in yourself makes more sense than any other investment.

 

You have the power

When you invest in yourself, you at least have some degree of control over the results.

If you invest in a skill that can help you make money, you know you can use it to make more, given that you provide enough effort. Once you start making even more money, you can ramp up your effort to a new level. Different variables are involved, and success isn’t guaranteed, but it’s much more predictable than other investments.

Suppose you have money invested in different areas of your project and business. In that case, you can measure each ROI and consciously decide every month or year which investments make sense and which ones don’t. You can continue to refine your efforts by cutting the bad investments and doubling down on the good ones.

 

The risk of traditional investment methods

You have little to no control over most other investments. The stock market is often up and down, and cryptocurrencies are even more volatile. Worse, if your portfolio goes down a ton, it’s gonna take a long time to go back up. For example, if your investments go down by 50%, you need them back up by 100% just to break even.

Many cryptocurrencies go down 50% or more regularly, sometimes as much as 90%. If you buy them at the wrong time, you may need to make as much as a 1,000% return just to get back to where you started. And there is no floor to how long an investment can go. A stock or crypto can drop 90%, only to drop another 90% from that previous number.

Index funds usually bounce back over time, but if you try to pick stocks and cryptos, there’s a chance their value goes down and never comes back up. Market conditions can ruin any investment. Even areas like real estate took a major hit during the financial crisis of 2008.

Real estate is the most reliable investment vehicle. However, there are still uncontrollable variables like whether or not tenants pay their rent on time, how well they treat the properties, and repair expenses.

If you want to be a great investor in these areas, you must have an iron stomach, patience, and the willingness to put your money into something you have zero control over. Compare that with investing in yourself. You can always bounce back because you have skills. It’s much easier to recoup and profit from your investment. And the risk profile is much better, meaning you have a much better idea of what you stand to gain and lose.

Speaking of risk, I want to talk about a concept that has helped me make huge financial wins with minimal risk.

 

Investing in yourself has a crazy high upside

Whenever someone asks me for a book recommendation, I always tell them to read Antifragile by Nassim Taleb. Antifragile means something that benefits from chaotic conditions.

For example, entrepreneurship is antifragile. The results aren’t predictable, but many different entrepreneurs help innovation move forward through tinkering and experimenting. Some entrepreneurs fail and wipe out, but you can avoid that fate thanks to the concept of convexity.

Convexity is an opportunity with an extremely high upside and a known downside.

The example Taleb uses:

You can’t sell negative books.

I invested about $8,000 into my last book project. If I somehow got zero sales, I knew my maximum loss. It’s a loss that would hurt but wouldn’t wipe me out of the game totally. The upside would be a runaway bestseller. It’s rare, but some authors write books that sell millions of copies.

All of my business projects are like this. I invest small amounts of money into projects, e.g., making an online course. Then, I launch them and see what happens. They always make some money. And thanks to the skills I earned from investing in myself, I can continue to chase even more profitable opportunities.

Thanks to the internet, the capital requirements for business are low. I recently saw someone on Twitter who makes more than $100,000 per month with just $650 in expenses, mainly software to run his products.

You can have a life of wealth and abundance if you choose to invest in yourself. Let’s talk about some practical recommendations for pulling this off successfully.

Related:

 

How to create your own personal “portfolio”

Let’s just assume you are starting from scratch and don’t have a lot of funds.

The first investment you should make doesn’t even involve money. You can invest your time in learning new skills.

This is what I did to start. I just read a bunch of free articles online, watched YouTube videos, and listened to podcasts. If you are a self-starter and can hold yourself accountable, you can build a brand-new life and career by consuming free content and acting on it.

You can watch lessons from Ivy League schools for free. YouTube alone has enough tactical how-to information to help you learn how to do anything. Starting a business can be as simple as Googling “how to start a business” and reading a detailed guide with step-by-step instructions.

 

Minimal cost investments ($100 or less)

Next, you can focus on investing in yourself with small amounts until you have enough money to invest more heavily. Books are the best option here. For $10-$30, you can access the wisdom of people who spent years figuring out what they’re teaching you in the book.

 

Books for those of you looking to start a business:

  • 100m Offers: How to Make Offers So Good People Will Feel Stupid Saying No
  • Dot Com Secrets
  • Expert Secrets
  • Traffic Secrets
  • The Four-Hour Work Week
  • Zero to One: A Note on Startups or How to Build the Future
  • Rich Dad Poor Dad

 

Mindset books that will help you stay on the path:

  • Real Help: An Honest Guide to Self-Improvement
  • Relentless: From Good to Great to Unstoppable
  • Awaken the Giant Within
  • The Magic of Thinking Big
  • The Obstacle is the Way
  • Psycho-Cybernetics
  • The 10x Rule
  • Be Obsessed or be Average

 

Books to make you smarter and give you a psychological edge:

  • Poor Charlie’s Almanack
  • The Almanac of Naval Ravikant
  • Thinking Fast and Slow
  • Influence: The Psychology of Persuasion
  • Fooled by Randomness
  • The Black Swan
  • Antifragile
  • Skin in the Game
  • The Bed of Procrustes

 

Books that teach you soft skills to properly manage people:

  • How to Win Friends and Influence People
  • The 48 Laws of Power
  • The Laws of Human Nature
  • Made to Stick
  • Words That Work

 

 

Medium cost investments ($500-$2,000)

These are usually online courses and programs that teach you a skill you can use to make more money. Most of them are self-paced, meaning you take them on your own time. Some are cohort-based programs where you take the course alongside a group of other students for a defined period.

You can take courses to learn a ton of different skills or business models, but here are the ones I’ve noticed that have the ability to help you make a lot of money:

  • E-Commerce
  • Web Design
  • Graphic Design
  • Lead Generation
  • Social Media Marketing
  • Blogging
  • Copywriting
  • Coaching and consulting
  • SEO
  • Software as a service (Saas)

Any of these skills can help you start a business. You can either become a freelancer or start a business that sells a product like physical consumer goods or an e-learning business that sells programs.

 

High-ticket investments ($2,000+)

At this price point, you can usually hire a coach to work with you 1 on 1 to help you grow and scale your business. You can even hire a coach to help you manage your life (e.g., hiring a coach to help you achieve peak time management and productivity).

Your options vary. You can hire someone for a one-time consult, for months or years, or for a specific, predetermined amount of time.

Coaches help you spot your blind spots and give you ideas you wouldn’t have come up with on your own. My business coaches have given me advice that has added thousands of dollars to my bottom line.

Also, you can invest thousands of dollars per month to run your entire operation, including working with contractors, taking on an assistant, or hiring full-time employees.

 

Final thoughts

I’ll leave you with this quote that describes the way you should think about investing in yourself:

I recommend spending all excess cash on acquiring skills until you have so much that you can’t possibly spend it on more skills. Increase your capacity to earn, which increases the value of your highest cash-producing asset (you). Relevant for today – skills are inflation-proof.

—Alex Hormozi

This is a game you can (and should) play forever.

Continue to stack your skills over and over until you have an empire. Once you have an empire, keep investing over and over again infinitely.