In our day to day writings, a lot of Personal Finance and Investing bloggers discuss Index Funds, ETFs, stocks, and other similar investments. However, I thought I would take a step back today and focus on your most important investment. Care to guess what it is?
If you said “House”, well…nice try, but that isn’t it. While most Americans have the majority of their net-worth tied up in their home, that isn’t their most important investment.
And if you said “Retirement”, give your a pat on the back, but sorry…that isn’t it either. It is true that retirement accounts consist mostly of stocks or stock funds; and that stock asset classes tend to outperform other assets over long periods of time, but that is not your most important investment.
It turns out that your most important investment is “You”.
Why is that? Simply put, everything you do and every decision you make impacts your financial future in one way or another. Your ability to buy a house and fund various financial goals stems directly from the income you generate from your job or career. And due to the magic of compounding, the decisions that you make now about your retirement will have far-reaching consequences 20 or 30 years down the road. Likewise, the lifestyle choices you make today regarding your health may have costly ramifications once you’re retired and on a fixed income.
What can you do about it? Invest in yourself. Take steps to maximize your ability to generate income, either by growing your career or business. Educate yourself so that you’re well prepared to make the right decisions regarding your financial future (and reading blogs like this are a great first step!); and think about your lifestyle. Are there habits that you have in place today that are going to have a dire impact on you or your health later on down the road? If so, then take steps to change them.
Have a great weekend!
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