Absolute BEST Investment

79 Replies

While teaching a class on parenting the other day, the subject of teaching your kids about money and investing came up. I posed to the group the question, “Which Investment gives you the best return?”

1. Stock Market (stocks, bonds,options, etc.)

2. Real Estate

3. Schooling at college or at a university

4. Leadership Training and personal and professional development

Now, to know the real answer would be very difficult to research because of all the differences that exist between Investment types and all of the differences that exist within each type, however, I would like to pose this question to you in terms of your opinion. In your opinion, which of the 4 investment categories above gives the best ROÍ and why do you think that?

@Shiloh Lundahl college education, by far...

The average, in state, college tuition is about $10k, so that's $40k for a bachelor's degree.

Average lifetime earning (45 years) for a bachelor's degree holder vs. HS degree is $1 million.

That's a 50% yearly ROI. No other investment comes close

@Jason D. Trade jobs like electrician- 4 years paid apprenticeship and 100k a year, after qualification all you need is a high school diploma.

@Brady Macdonald sure, but that wasnt one of the options, and the average trade school grad doesnt make $100k, nor does the average electrician.

When speaking averages, a college degree is the best investment

I followed this path:

1) Schooling at UCSB. Having a college degree helped me reach my professional career goals landing me the job I have now.

2) Investing in Stocks after taking some basic investment courses, diversified portfolio with dividends reinvested. Some of my stocks have doubled or tripled. I learned to not put all my eggs in one basket. I buy what I like or know, products I trust or use for example (Amazon, Starbucks, Apple). If the stock tanks, I don't hesitate to ride it all the way down. I know when to jump. I consider it my back up nest egg as Social Security likely won't be around when I retire.

3) Leadership Training - professional job growth. Learned to lead a team of talented designers at a real estate software company. Watched and learned about real estate property management. Having worked for a large company of 6,000+ employees has taught me quite a bit about the business professionalism and the value of health insurance, 401k and all the benefits offered.

4) Advised my in-laws to purchase real estate investment properties and assisted with the financials so they could retire with passive income. Once they were successful, I took the plunge and bought my first income property. The real estate investments have provided good returns in all cases. I always bought low & made sure the properties had good bones. Through sweat equity, I've held most of the properties for at least a few years. Some I have cashed in for various reasons. But I have learned that as a small-time investor, it's best for me buy & hold (rent) for a year before selling to avoid long-term capitol gains. There's so much to learn in the RE industry and it's always changing/evolving. 

Originally posted by @Margie Kohlhaas :

I followed this path:

1) Schooling at UCSB. Having a college degree helped me reach my professional career goals landing me the job I have now.

2) Investing in Stocks after taking some basic investment courses, diversified portfolio with dividends reinvested. Some of my stocks have doubled or tripled. I learned to not put all my eggs in one basket. I buy what I like or know, products I trust or use for example (Amazon, Starbucks, Apple). If the stock tanks, I don't hesitate to ride it all the way down. I know when to jump. I consider it my back up nest egg as Social Security likely won't be around when I retire.

3) Leadership Training - professional job growth. Learned to lead a team of talented designers at a real estate software company. Watched and learned about real estate property management. Having worked for a large company of 6,000+ employees has taught me quite a bit about the business professionalism and the value of health insurance, 401k and all the benefits offered.

4) Advised my in-laws to purchase real estate investment properties and assisted with the financials so they could retire with passive income. Once they were successful, I took the plunge and bought my first income property. The real estate investments have provided good returns in all cases. I always bought low & made sure the properties had good bones. Through sweat equity, I've held most of the properties for at least a few years. Some I have cashed in for various reasons. But I have learned that as a small-time investor, it's best for me buy & hold (rent) for a year before selling to avoid long-term capitol gains. There's so much to learn in the RE industry and it's always changing/evolving. 

All of them are important but I value learning and knowledge the most.  The stock market, real estate, and the rest of life can crash around you but it's your knowledge, development, and mindset that help you handle it and can build or rebuild anything.

“Investing in yourself is the best investment you will ever make. It will not only improve your life, it will improve the lives of all those around you.” ―Robin Sharma

I have been around the block many times through different decades. I disagree with the automatic answer that a college degree will always be the best method. I have seen too many college degrees that proved useless in that particular field and at one time I believe over 50% of bartenders had a college degree. I don't think it is fair to just make a blanket, that college degrees are always the best way to go. I have personally known people that have gone into businesses of their own or made much more than $100,000 per year on the trades they learned

.If someone is talented and good, he or she will succeed in what ever the business is where they decide to enter in.

@Rich Weese you're right, but if you're talking to a group of people, and want to share the best investment you can make, in general, you have to go with averages. Personal experience and one-off exceptions are not what you want to do.

The general advice to give about the best investment they can make for their childrens future, college is the answer.

It's not the answer for everyone, but its the answer to the general public.

50% ROI, on average. No other investment, 9n average, comes close

Jason D,

We are just going to have to agree to disagree. I realize I am taking the contrarian view and I have numerous experiences and reasons for that view. The amount of debt a person is left with after receiving that degree is sometimes difficult to pay off with the job they end up doing after college. There are a certain percentage that do not even stay in the field where they earned the degree. There are also degrees that end up being useless because that particular field has disappeared or changed significantly and on the job training becomes more important for advancement. I acknowledge that many of the things learned in college are helpful in your life but so are the things learned on location in the field you enter.

I have always been a believer that no one will ever pay you what you are worth, except you. I'm very oriented towards trying to get into a field or a profession where you may end up as your own boss. There are too many college degrees that do not allow that option. Those are my reasons and I realized where your viewpoint is coming from.

@Mike Dymsk

1000% agree... Those 4 options listed on the post mean nothing compared to investing in oneself.

I vote for number 4, personal and professional development. Although it takes a minimum of 14.5 years of training from college to board-certified radiologist in the U.S., I can wholeheartedly say that traveling, reading, meditation, audiobooks, meeting people from all over the world, self-reflection, mistakes, are the best education and ROI by far.

What I know in my heart, the confidence I have in my mind, and the ability to control your health and destiny are worth more than the ROI on any real estate deal. You have to be willing to go to $0 and have the confidence that you can still be happy and prosper again. That is where the juice really lies.

@Shiloh Lundahl The Number 1 investment one can make in my opinion is in themselves.  With that said one has to be careful in the way they decide to make this investment. @Jason D. 50% of college graduates do not end up in a field that their degree is needed for. College in my opinion is a toss up if you are not calculated in the decision. If you go into massive debt, and end up not being able to get a job you can end up paying student loan debt that you can not default on for a lifetime. A out of state B.S. in psychology will most likely not have a good ROI, and will probably cost you a ton of money throughout life. On the other hand getting a in state B.S. in chemical engineering can be very lucrative.

Also, the qualitative benefits from investing in ones self are hard to calculate the ROI on. If you read a book, or have an eye opening experience that changes your life forever. That could be more valuable to you then anything. There could be a book or mentor that change perspective that end up making your tons of money, or makes you look at money and life in a very different and valuable way.

Originally posted by @Jason D. :

@Rich Weese you're right, but if you're talking to a group of people, and want to share the best investment you can make, in general, you have to go with averages. Personal experience and one-off exceptions are not what you want to do.

The general advice to give about the best investment they can make for their childrens future, college is the answer.

It's not the answer for everyone, but its the answer to the general public.

50% ROI, on average. No other investment, 9n average, comes close

But does the "average" college degree offer a 50% ROI? I don't believe so. I read somewhere that only 20% of college degrees offer jobs above the national average?

@George Pauley yes... that's what the data says. The average bachelor's degree holder earns $1 million more than the average HS graduate

@Jason D. You keep on mentioning the word average yet end with “the best.” Doing average things will get you average results. Going to college and getting a job is simple and straightforward. We can’t expect everyone to have the same one off experiences/etc but we can expect everyone to have one off special experiences. You can’t dismiss the unknown just because it’s unknown #blackswan. It goes both ways. What if the person who has a job, gets sick, and can’t work anymore? You can become “rich” by trading your hours for money but you won’t be wealthy. Who wants to work 9-5 for 45 years anyways? A podcast recently mentioned something like, “Know what you’re worth, it’s more than your salary”.

@Steven Ko the reason I answered this way is because the question asked was "what gives you the best ROI".

So, to determine that, you look at what the "average" ROI is for each option, because, in general, the average is the most likely outcome.

That's why averages are used in studying data. When you want to know what your property is worth, you take the "average" of similar properties, and you can be fairly certain that your property will be at that "average"

Talking about exceptions, opinions, experiences, and anecdotal evidence dont change the data.

When looking at the most likely outcome of each "investment", a college degree has the highest ROI. And, that doesnt include investing that 50% ROI and compounding it into even higher gains. Your average ROI if you were to reinvest that gain would probably result in a 10 fold increase over time.

I know it seems like there can be some debate here, but there isnt.

The answer to the question, "what investment gives the highest ROI, based on the most likely outcome" the answer is a college education.

You can argue that college isnt for everyone, that there are other options that will make you more successful and earn you most money, and I would, wholeheartedly, agree with all of those statements.

I do not have a bachelor's degree. I've been in the Automotive trade for 20 years and have been more successful than many of my college educated counterparts, but that is the exception, and not the rule.

I'm going to agree with @JasonD, in my case at least. College also gave me solid background and confidence.

That said, you have to be strategic about it. My parents had saved, I worked hard and saved, so graduated Univ. of Oregon without debts. 

Also have to be strategic about choosing a major...big loans for a Medieval Studies degree will test that ROI, where my business degree has had solid returns...

That said, I agree Univ. isn't for everyone. Community Colleges and other training programs have come a long way...

@Mike Dymski

Agree with Mike. Education can come in many forms, not necessarily school. My order would be education #1 and REI #2.

@Jason D. I dont think a college degree is that useful anymore, most of those job markets are really flooded and not job seeking at all. I feel trades are the way to go now. My uncle is a welder and very financially literate he saves his money and takes overtime twice a week and for 10 hours and Saturday for shutdown. On over time his making ~$75/Hr. No college degree, just on the job training.

@Shiloh Lundahl

Trade Education by far. Investing in my self took me from minimum wage nights and trade school days to business owner, and six figures over the course of 6 years.

A lot of people would say luck was involved, but it was also a lot of being prepared to meet the opportunity head on when it crossed my path.

I’m not pushing my kids to go to a 4 year school.

A free 2 years here in TN, and and trade like HVAC/Plumbing/Electrical is all they need to be miles ahead of the work force.

Trade School on the way. Return on investment is higher than any single stock I could have ever picked.

@Shiloh Lundahl , I would combine #3 & #4 and call it "Investing in yourself".  

No one mentioned risk yet, either.  Investing in yourself is generally going to be the best return with the lowest risk.  

And like any investment, it's good to have some thresholds which prevent you from overspending on yourself.  Numbers won't be perfect or precise.  The important part is that each person considers those numbers for him/herself in the short & long term.  

Personally, I'm looking for 2x or greater gross CoC return in year 1 after the training/education. If my kids' college costs $50k over 4 yrs, they better have a $100k starting salary. If not, they'll find a cheaper school. Community colleges for the win here.

On the other end of the spectrum, invest much less than $10k to become a licensed agent, appraiser, inspector, loan officer/underwriter, trades person, and you'll easily make 3x, 4x, 5x, and higher in yr 1.

Circling back to Stocks, Real-Estate, and other investment choices, good luck making 2-5x and higher returns with such low risk as self-investing intelligently.

Originally posted by @Mike Dymski :

All of them are important but I value learning and knowledge the most.  The stock market, real estate, and the rest of life can crash around you but it's your knowledge, development, and mindset that help you handle it and can build or rebuild anything.

“Investing in yourself is the best investment you will ever make. It will not only improve your life, it will improve the lives of all those around you.” ―Robin Sharma

 Exactly !  in 09 in the depths of reflecting personally back on 30 years and what the heck just happened vis a vi the real estate space.

I was comforted in the fact that even though things were so ugly.. I still had the knowledge to do it again.. Just like a lot of the builders I work with.. most went broke had to file BK lost it all .. but they had the knowledge of how to build that did not leave them and now they have crawled back.. a few of the ones I helped 5  years ago or so when they built out my developments.. have now got it together and are doing their own deals.. 

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