Investing in yourself

When many first start digging into the world of "Investing" their first thoughts generally gravitate toward financial investments.

Concepts such as stocks, bonds, cryptocurrencies, real estate, and other related topics are commonly brought up in discussions involving investments. We are constantly exposed to these terms by simply reading the daily newspaper, listening to TV news reports, getting ads from YouTube, or sometimes just by talking with a few of those friends who are venturing into the world of financial investments.

This conventional understanding of "Investing" is predominantly focused on using our money as the main resource of an investment.

In the beginning, like many others, my understanding of investments was biased by this way of thinking too. However, as I delved deeper and gained more knowledge on this topic, I was able to discover great resources that taught me what's the real idea behind the concept of Investments and why they should not be restricted to only financial investments.

If I should come up with a sentence that summarizes what I have learned in these last few years regarding "Investment”, it would sound something like this:

Investing is the act of committing your time or money into something today, holding onto the hope that it will yield positive outcomes in the future.

As you have just read I used “committing your time or money” and not only “your money”.

One of the first things that I completely ignored when I started to get curious about how investments work was that time can also be an investment resource or, as many like to say, time is money.

Easy to say, but I believe not everyone fully understands what it really means.

For those like me who didn’t grasp what Investing your Time really meant when they heard it for the first time, I'd like to refer you to one of the fundamental concepts in Finance which is evaluating opportunity cost.

To put it simply, let's imagine you have a passion for photography but you spend most of your time working in a supermarket. You decide to start spending your free time over the next few months capturing a new photo series collection to put into your portfolio. You invest your time in researching locations, planning and making shots, and also going crazy with editing tools trying to improve your photos by a rough 5% (ok, maybe more 🙂)

But how else could you have spent that time? Perhaps you could have chosen to unwind with leisure activities, spend time with friends, go for a walk, or even opt to work overtime.

The opportunity cost here is the potential enjoyment you might have gained from these activities or the money you could have earned by working overtime instead of doing your photography shots.

But after having completed the photography set, not only will you have a brand new photo collection to showcase in your portfolio; you will most likely have increased your photography skills as well. This investment of your time may not yield immediate financial returns but it will contribute to your personal satisfaction, skill development, and most importantly to express your creativity by having created a tangible product that reflects your passion, efforts, and skills, which could result in you, one-day, getting a job offer as a photographer (and potentially doubling your salary).

The point of this example is to emphasize that you're using your time as the primary investment resource and not your money. Ok, owning professional camera equipment, moving to specific locations, purchasing editing tools, all this stuff has some kind of costs involved. However, for simplicity, let's assume that these costs were covered beforehand or can just be considered of an irrelevant amount. The main investment driver still remains your time.

The reason why I chose this particular example is to connect to the central theme of this post, which is Investing in Yourself.

I believe that the importance of investing in oneself can sometimes be overlooked in favor of financial investments because of their measurability easiness compared to more “abstract” investments we can do “in ourselves”.

Indeed, assessing financial investments proves to be more straightforward as they are quantifiable, supported by percentages, and backed by numerical indicators derived from portfolio spreadsheets or brokerage accounts. These tools provide real-time insights, allowing us to gauge our financial direction with clarity. However, the same cannot be said for self-investments, which often present a more abstract nature. Evaluating their current intrinsic value becomes challenging, leaving us uncertain about the wisdom of our choices, particularly when these investments in ourselves span over a considerable duration of time without yielding tangible results.

The most glaring example is investing in our education.

We commit time, money, effort, and resources to acquire knowledge and skills by attending universities, boot camps, online courses, etc.; yet the outcomes may not manifest until later in our professional careers. That's why many people decide to pursue more tangible short-term results instead of getting into the unknown.

I always like to recall the story of me pursuing a degree in Computer Science.

I was a teenager back then and I remember having to relocate to a different city where I was unfamiliar with anyone, sharing an apartment with strangers. I found myself immersed in late-night and weekend study sessions, striving to carve out extra time to comprehend challenging subjects or to complete very demanding projects. I will never forget repeating the same exam over and over again hoping every time for a luckier run. I will never forget when I had to face illnesses alone without having anyone to ask for help just to have some basic medication.

That lasted for three uninterrupted years, relying on a very tight budget given by the university scholarship and from my family (whom I'll never cease to say thank you).

Many times I thought about giving up because I couldn't see the light at the end of the tunnel, but eventually, I held on for one simple reason: I loved what I was studying and doing even though sometimes felt extremely hard to just keep going.

But as of today, I can definitely say that if I hadn't chosen to pursue that CS degree, I probably wouldn't be here sharing this post with you. The abilities that empowered me to build this blog today are some of the fruits that grew from the seed I planted when I decided to get on board a CS degree course instead of jumping straight into the workforce world in order to earn money as soon as possible. That choice laid the groundwork for the skills that now allow me to have a full-time job as a software engineer, express my thoughts through this blog, have a YouTube channel, and share my experiences with others.

Obviously, this educational investment I've been through did not end the day I graduated but rather it has constantly been fed through the years by my desire to expand my personal knowledge by reading books, watching videos, listening podcasts, taking courses, creating stuff, experimenting with new things, meeting new people, and much more.

All the value that I'm able to craft today on my job, side projects, posts, or just as personal thoughts are given by the result of this investment I made in myself. If instead, I would have preferred to invest all that equivalent amount of money into some kind of financial assets, maybe I could have more money resulting in my net worth spreadsheet BUT… I wouldn't be the person I am today. And I'm glad with who I am today even knowing what the cost of becoming it has been.

So are you saying that financial investments are not worthwhile and that we should invest all our money in ourselves?

Absolutely NO!

Especially if you had a discrete wealth to manage, financial investment still remains the best way to defend your money against inflation and to let your money grow over time (assuming that you're not doing crappy stuff with your financial investment).

I am referring to all those people who think that starting to invest will make them rich overnight or young people who are not focusing enough on improving their future by investing in their education, traveling, doing internships, taking courses, or attending events, just to name a few things that come in mind right now.

Financial investments, if done judiciously and knowing what one is doing, will always be a wise thing to do. But between buying a new laptop and taking a period of time to improve one's professional skills in order to land on a better job OR investing the same amount of money in the S&P 500, I believe that what will be able to guarantee greater results is the former.

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What I don't consider being investments in ourselves

Spoiler: I don’t know. It’s up to you and how you evaluate your time and money.

Cleaning your room, scrolling social media, doing shopping, driving your car… I think that here we all agree that those are not ways of investing in ourselves, we can't expect any positive outcomes by doing those actions.. or can we?

For me NOT investing in myself is doing things that I feel are not bringing value in my life (and not necessarily I like doing)

But let's try to analyze some common real-life scenarios.

Could spending every night out with friends positively impact your future life?

Maybe yes, you could be leveling up your social skills, bonding, and expanding your network. But hold up, what if it's just a boredom buster or a stress-relief session after work? And, oh snap, you find yourself doing things you'd rather not (like drinking alcohol or smoking cigarettes), turning those nights into a time-wasting fiesta.

Looking back at my teenage years, I was used to hanging with people (whom I used to call friends back then) who didn't quite match my vibe, doing stuff I wasn't into, all just to avoid being tagged as the "weird guy". With hindsight, I could've used that time to dive into things I actually loved doing, and would probably pay me off in the following years.

Now, no one's saying to ditch your friends (unless they're cramping your style), but in this scenario how about easing up a bit? Instead of every single night, maybe reserve specific times, like weekends or just a few weekdays, to keep those connections alive.

Maybe, like most of us, you do find value in spending your time with them but also in other activities, like reading, learning new stuff, expressing your creativity, etc.

Let's try with another example.

Can regular nights spent watching Netflix influence your life?

Could it help you land a better job, secure a promotion, or even set the stage for your own business? Well, it's a bit of a mixed bag. If you're tuned into a show that you genuinely love, it might be doing more than just providing entertainment. Perhaps it's even helping you pick up a foreign language, potentially opening doors to job opportunities abroad.

On the flip side, it could also be just a way to unwind and escape from life's challenges.. totally understandable.

I want to make it clear; there's no judgment here. I'm not a huge Netflix buff, but I've stumbled upon shows that serve a purpose, like enhancing my English skills for my daily work or just as motivational boosters.

Here's the main takeaway: not everything needs to be a grind to have positive impacts in your life.

Even seemingly leisurely activities like watching Netflix can bring unexpected benefits. It's not just about the tasks we think will lead to positive results (like dieting, working out, studying, etc.). Sometimes, a bit of screen time can be more than it appears.

Focus on things you can control, ignore the rest.

That's one of the most important rules of stoicism. That's the greatest power of investing in yourself. The outcome of your investment depends on you, on your daily actions, on your perseverance and motivation. Period.

You are not at the mercy of events whose outcomes are outside of your control like market runs, interest rates, wars, inflation, etc. where generally you end up getting exposed by holding financial investments.

So the next time you hear sentences like “You should invest in this” or “You should invest in that” or anything along those lines remember... you should invest in yourself first! 🫵