Absolute BEST Investment

79 Replies

Originally posted by @Roxanne McClain :

@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.

 in our day to day which is building new construction communities the sub trades make bank.. heck our dry waller has over 600 employees and a Jet  LOL..  there is huge money in the trades.. you just need to be able to speak fluent Spanish and you can kill it. far more than you would buy 200 a month rentals.

Originally posted by @Adam Apalategui :

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...

I put both my kids through collage so that when they graduated they had zero debt and a new car LOL.. I sacrificed for this but its one of the things I am most proud of.. I know some parents think their kids should pay for their own education.

My daughter was top of her class got hired at intel and is now in management.. and just about to take her second sabattical and take their family to Europe for a month.. but she is a Ramsey deciple with no debt.

my son is a GC with a degree in construction.. 

AS real estate go I am a big believer in some one has to build these places there will be some automation.

I just had one of my Singapore investors over to look at one of our projects here in Oregon.. when we were having dinner. He said through robots and automation he has cut his staff from 17,000 3 years ago to 7500 today.. now granted those machines he buys are a million a piece.. and one factory I looked at personally in Malaysia had over 100 of them on the floor.. 

He said China is going to have issues with automation and population losing jobs.. just like we see here.. he even thought that China is going to have to implement social welfare.  

I hear about how kids these days...even some friends...have hundreds of thousands of dollars of debt when they graduate.

I would say a college degree is worth it, assuming that there is a good return in your field and you aren't saddled with a massive handicap (for lack of a better term) before even making your first dollar.

Personally, I was a dope in HS and was practically laughed at applying to any college, including local state schools. Probably the best thing to happen to me -- my mom forced me to go to community college. I was working as a bartender and she had saved every single birthday, christmas, graduation, etc. gift I had ever gotten for this moment. All that saving she did for me was able to easily cover my tuition at community college (1500 a semester? No problem!) and I was covering all my living expenses slinging drinks on busy nights.

All my credits transferred to my eventual college and I got my act together -- graduated from Temple U. with a business degree (again, ROI), had to get a loan from my mother for the last semester, which I paid off quickly. Net-net...no college debt, college degree, and not having to make those payments for the next 30 years to reduce some arbitrary debt is HUGE.

College degrees are important and most professional jobs require them. But the METHOD of obtaining it should be under very close scrutiny by all parents and students. If you aren't brilliant and don't have any scholarships, your first few years of college is essentially paying the college to give you the same education you can probably get cheaper at a community college.

Colleges exist not to pass along knowledge, but to seek larger endowments, expand their real estate breadth and reach, continue their upward climb in rankings, and always increase number of students YOY. They're NO DIFFERENT than every person on this board looking to make their pockets bigger. It's a BUSINESS. My degree from Temple is NO DIFFERENT IN THE REAL WORLD compared to say, West Chester U, or Penn State, etc.

Now, people in their minds rank colleges higher. E.g. Penn, Drexel will be "worth more" than a Temple degree. Fine. Certain degrees from those schools (e.g. Drexel's engineering program) will have more clout in their respective field. Fine.

But the decision to go to college is as much a financial decision, in my opinion, as it is an education. Facts are facts -- they'll teach you the same facts in relatively the same fashion at most schools and cover 80% of the material. The rest, as they say, is immaterial and perception, in my opinion.

I've also been in the "professional working world" for 12 years, and I can honestly say that your college, to a recruiter, is like "oh, that's a good school" or "oh, i never heard of them" -- once you get the experience nobody gives a damn about your GPA or your school. The only things that we do look for, are the "BS" colleges (which is a shame, but again, perception) like a University of Phoenix, Devry, etc. One day, the perception of those colleges will change, but it's going to take several years.

Sorry for the rant...I agree college is important but to automatically take on 200k of debt when you could have taken on only a fraction of it, or none at all, signals a serious error in judgement and common sense. If I ever have kids, and they don't get scholarships, (I know I'll fight my wife to the death on this) but I'm going to strongly, strongly recommend they go to community college/junior college. I'll be damned if my offspring will weaken my financial position. :P

I have made most of my net worth via RE but not by much as I have had a successful career (engineer) and have done outstanding in my non RE investments (stocks, mineral rights).  I could retire on any of the 3 by themselves.

But would I have done as well with my RE if I had not learned/experienced what I gained by getting a post graduate degree and working?  I have some doubts that I would have been as successful with my RE, but if I could have got the resources to play at the same level, I am sure I would have still been successful.

The regular job that I got due to my college education gave me the resources to make investments in RE, stocks, and mineral rights.  So I think it is the sum total of experiences that make the success of an individual.

You can learn every day.  If you learn every day, you will have a better chance to succeed, whatever path you take.

@Jason D. I feel like some people in the comments aren't getting it. Even if you come out with debt, you pursue a different career path then what your degree was for, and make make less money then someone who chose to learn a trade, that's not everyone. As a whole, as an average, most people have an ROI with a degree that they cannot get anywhere else. I'm not saying it's the best (It's difficult to quantify personal development), but, it has number that are difficult to beat.

Do the thousands of teachers average into your calculations also? I have always felt that a teacher does it for love of the job and would be rewarded financially much better for his/her talent in some other field. If you're good, you're good and going to be successful. Some successes are more financially rewarding than others......

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

How did you calculate your ROI? Is your ROI calculated over an entire career? I suspect it is. The annual return on that lifetime return (i.e. $1M in todays dollars) is not that great.

$24K without a degree (obtained via first result on Google search).  Use 40 year career and 10% annual return would equate to more than $1M.  If I used 50 year career the annual return would be even less but I used a number that would have people retiring before 60; I probably should have use 45 year career.

$24000 * (1.1**40) = $1.086M

I know that I have achieved far better than 10% return on my RE investment and more than 10% return on my non-RE investments.

Statistically 50% return over 40 years is not real impressive.

BTW I am not in full disagreement with you on the education being the best because there is intangibles that come with the education such as the contacts made, the skills that can be applied to areas other than career (such as being able to do analysis on if a RE is likely to be a good investment), the critical thinking that can be applied to many areas of life, etc.  This has to be weighed against the costs.  There is the monetary costs but there is also the time costs.  I have finished two MS.  Part of the first one and the 2nd one was while working a full time job.  It took time and sacrifice.

Look at the $1M difference in life time earnings and it is a good annual return, but not a great return.  Hopefully someone that gets a college degree has other benefits other than just the increased income.

@Shiloh Lundahl I guess it depends on what you value. You can invest with time or you can invest with money. Rich Dad, Poor Dad is a classic example as to why a college degree isn't a good investment. And time isn't something you're always going to invest with. Sure some of may be Ramsey fans (like bp money) but I'm sure many of us like to enjoy the finer things in life and get lifestyle creep. And it just depends on what life stage you are at. It's almost offensive to say you invest in stocks on bigger pockets (which doesn't make sense to me). My only problem with a college degree is they don't teach financial literacy and you have to seek it out on your own. BP members are the exception and when I try to get any of my friends to get into investing, they always make up excuses. Sure a job is most consistent but if you don't combine that with stocks/real estate/ and into your self, you simply will not get the best ROI. One is too close to none!!

There are plenty of exmples too where one person starts at the age of 20 and invest 10k a Year of his 30-40k non college degree salary while another person who makes 100k with his college degree but spends his money for 10+ years and gets a late start on investing. I’ll let you decided who ends up wealthier. So a college degree with no financial literacy might end up...not great. I’m sure we all have different assumptions on what the details are of the question (best average result, are you investing time or money, what’s worked for us, etc). There is no base line to this question which makes all answers wildly different and correct. We can all bring up examples to make the answer we pick to be correct :p.

I agree with @Dan Heuschele  above. College is in no way the "clear" winner. There are way too many variables.

In order for a college degree to be the best in the options listed, you would have to be able to attain a low cost degree but once which you graduate, stay in the field you studied and be paid enough to pay back the loans you have with enough left for cost of living (home, food, clothes, transportation, etc.) + money left for saving and investing. Herein lies the problem, there are few that will get this.. @Jason D. and @Alexander Vasquez , this is not occurring in today's society which is why there are soo many early twenties living at home with their parents. Getting to that +1mil with a college degree is few and far between.. If this is a class being taught right now to parents whom will have kids that go off to college in the next 5-10 years, no way college is even top two for ROI.

I learned more about business reading Rich Dad Poor Dad than I did in 4 years of taking business and finance classes for my undergraduate degree. Nobody should be going into debt to get a college degree. Most entry-level jobs college graduates take can be done by high-school dropouts.

@Shiloh Lundahl

You already had the answer in your mind and wanted people to agree. You are probably right on the average American college is the best ROI. But BP on average has above average income earners and well above average ambition I'd average. :)

So the answer would be learning and personal development for the BP crew.

Personally I have a great engineering degree I could earn a nice little living on. I hung it on the shelf to be in real estate full time. Also, the return on learning from books and BP has a significantly higher ROI than anything and I've made more money from the motivation and expertise provided here than Purdue ever provided.

But for the fortnight generation in state not private college is probably best. Hopefully in something employable and not sociology or history. My taxes are high enough and don’t want to support more people.

I will say college because it's the closest to my real answer

BOOKS 

college is a place where you may or may not get educated. if you can find a way to make reading a lifelong habit, my opinion is that it is by far the best investment one can possibly participate in. That said, there are pitfalls here the same as college, not all books are equal just like no all college is equal. 

It really depends on the person . For me college would be a poor investment but for my wife it has been wonderful for our bottom line as a family . I would have to say in general investing in yourself will give the highest ROI . Somebody that has their mind right with goals doesn't need a PhD or a trade school to become wealthy . You can be filled with head knowledge and still fail as so many do . I can say that because The greatest minds ( Ford Edison Einstein etc.) of the 20th century had very little schooling . The word education in its original form means to " draw out" that is to say you already have it . We all have a genius endowed by our creator I. Our minds and through Personal development it can be drawn out is my belief .

Give me a stock clerk with a goal and I’ll show you a man that can make history ., but give me a man without a goal and I’ll give you a stock clerk

-J.C. Penney

@Dan Heuschele that return is 50% per YEAR for 45 years. So the $40k you spend now will yield you $1 million in 45 years. That means that you are making, roughly, 20x your money in 44 years.

If you buy an investment property today, for $40k, its highly unlikely that it will be worth $1 million in 45 years.

If you invest $40k in the stock market today, it's highly unlikely it'll be worth $1 million in 44 years.

@Jared W Smith the + $1 million more is the AVERAGE, not the few and far between. The few and far between is when the HS graduate out earns a bachelor's degree holder over a lifetime. You have it backwards....

Originally posted by @Jason D. :

@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, you misinterpreted what George was saying. In other words, he's asking "does an average college degree, lets just say a business degree, yield 50% ROI?"

Probably not. It could be that only the top 20% of degrees (ie. IT, engineering, medicine) are carrying up the ROI to that high because those degrees may have an ROI of 60-70-80% or higher. Perhaps a business degree only yields 20% ROI, who knows.

I agree with your viewpoint as it's objective and factual but the answer to George's question is probably no. 

@Jason D. , I know what you meant. My point is that based on today's society, most people are not meeting that $1mil "average" you are clinging to across their lifetime with a degree. Therefore it's an exception.. not an average. This was a statistic when 4-year bachelors degrees was above average to have. Not anymore. Show me data to support that in today's society, 2019, and the foreseeable future (5-10 years) that this is accurate. 25-30 years ago.. absolutely.. 15-20 years ago.. yes... 10 years ago.. I don't know, maybe. But not today..  

I digress.. 

@Jared W Smith according to the bureau of labor statistics the median wage of a bachelor's degree holder was $400 more per week than a high school graduate. This data was from 2017. I cant imagine much has changed in 24 months....

https://www.bls.gov/opub/ted/2017/mobile/high-school-graduates-who-work-full-time-had-median-weekly-earnings-of-718-in-second-quarter.htm

Originally posted by @Jason D. :

@Dan Heuschele that return is 50% per YEAR for 45 years. So the $40k you spend now will yield you $1 million in 45 years. That means that you are making, roughly, 20x your money in 44 years.

If you buy an investment property today, for $40k, its highly unlikely that it will be worth $1 million in 45 years.

If you invest $40k in the stock market today, it's highly unlikely it'll be worth $1 million in 44 years.

@Jared W Smith the + $1 million more is the AVERAGE, not the few and far between. The few and far between is when the HS graduate out earns a bachelor's degree holder over a lifetime. You have it backwards....

If I start with $40K and in 45 years it is worth $1,040,000, the annual rate of return is 7.5%.  I definitely have done far better than that with my RE investments so far and better with my non RE investments so far. 

$40K * 1.075**45 = $1,036,194

or using a rate calculator from the web if you think my math is not correct ...

In addition, the lifetime S&P 500 return is greater than that. How are you showing this to be 50% annual return?

@Jason D. , you've harped on your point at the onset of this thread and now I should provide data to support my point? Challenge accepted. 

Forbes.. https://www.forbes.com/sites/realspin/2013/06/12/dont-buy-the-hype-college-education-is-not-an-investment/#6440f2175e02

"...The most glaring flaw is that it draws a conclusion about future conditions (earnings that people who go college now can expect) from data based on earnings for college graduates going decades back. Conditions today, both with regard to college academic rigor and the labor market, are much different than they were 40 years ago.

"...you’re not rewarded for credentials, but for capabilities.

College used to look like a good “investment” because earning a degree usually entailed at least some serious work and having done it set the individual apart. Having that degree was a competitive advantage in landing a job, but success always depended on personal performance rather than educational pedigree."

This is exactly my point spelled out. This serves @Chris Marte and @Dan Heuschele 's point too. There is no validity to your point in 2019. 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here