The Best Investment

For your long-term prosperity and that of your family, invest directly into yourself and your family. There are four primary ways to do so:

1. Relationships
2. Food
3. Exercise
4. Education

The first three are beyond the scope of this post but, suffice to say, without community and healthy relationships, nutritious food, and exercise, it will be hard or impossible for us to secure long-term health, happiness, and success for ourselves and our family.

But what role does education play? As we detail here, more education helps us to live longer, have better psychological and physical health throughout our lives, and earn more. Education then is vital not only for our success but for our very survival.¹

Already we can see why it’s important to invest in education. But here’s why education, when evaluated as an investment, is so beneficial.

Investments must balance two typically competing factors: Risk and Reward.

Usually, the higher the risk, the higher the potential reward, and vice versa. What makes education such an incredible investment is that, on average, it has very, very little risk and has very, very high potential reward. Here’s why:

• Except by injury or old-age, the knowledge and skills gained from education can never be taken from you. That’s in contrast to every other material investment, which can be lost from unwise decisions, taken by creditors, seized by the government, or stolen by thieves. For example, let’s say you pay off your house but at some point cannot pay your property taxes, even your house and property will be taken from you and auctioned off despite that you “own” them. No material asset is fully protected. In contrast, education is a personal asset, it is taken everywhere with you without fear that it can be lost or stolen, and, as such, it is the most secure investment.
• In good economic times and bad, education retains its value. Those with the least education always have higher unemployment rates and lower earnings than those with the most education, but those figures become even more extreme during economic downturns.² Additionally, in severe economic downturns, material assets can lose over 50% of their value; education does not. It consistently performs, whether in sunny or stormy economic seasons.
• The return on investment is massive. Each year of education is worth an 8% increase to lifetime earnings.³ An 8% raise on lifetime earnings for just one additional year of school. That’s absolutely massive. On average, those with a professional degree earn roughly 400% more in their lifetimes than someone who did not graduate from high school. Not 4%. Not 40%. 400% more.

Because education is typically more secure than any other investment, almost always retains its value, and, on average, produces fantastic returns, it is an ideal investment. If you combine those factors with the fact that more education leads to a healthier and longer life with more success, education becomes the best financial investment we can make for ourselves and our families.

Works Cited:

1. https://summitprep.com/is-all-education-meaningful/
2. https://www.bls.gov/opub/mlr/2018/article/great-recession-great-recovery.htm
3. http://freakonomics.com/2012/07/30/freakonomics-goes-to-college-part-1-full-transcript/