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Patri on Compound Interest vs. Investing in Your Skills

The ever insightful Patri Friedman has commented on "My Spending Over the Last 8 Days." Very good insight on the pros and cons of investing in assets for compound interest or investing in your own personal development -

It's tricky, because on the one hand, there is all the magic of compound interest you refer to, and OTOH, if you love working and will be making good money the rest of your life, then you have ample opportunity to make it later. For people who want to retire as early as possible, working hard for max savings makes sense. The difference between saving HARD (and researching a minimal cost retirement in another country) vs. saving just 10% a year can easily mean retiring at 35 vs. 60.

Bur for those with valuable skills who like to exercise them (which it seems like is the case for you), who like to always have a hand in the game, the value of saving is less.

One unfortunate thing is that when you are young, you tend to have both rapidly growing savings and career, it is the time when investing in savings yields the most l ong-term returns...and so does investing in yourself. Both of them compound.

Personally, my net worth has gyrated insanely over my adult life, so making good spending decisions has always been hard!

Invest in Yourself

On NWO Solutions

I love having a long term, strategically minded brain. Most of the things that I have learned over the past 5 years have been things that I have looked at as strategically significant if they were applied over a lifetime. For me these things have included learning about investing, finance, and money; emotional intelligence, dating and relationships; and health, fitness, and vitamins. By figuring these out at a young age, I will have the rest of my life for them to pay dividends.

I believe it is the exact same idea with personal development. Learning investing and dating at a young age only took me a few years each. I now have years for the investment to pay itself back.

For investing, I have been at it for around 4 years. At first it was a very expensive process. I was buying $300 or $400 worth of books every few weeks, in order to really immerse myself in the topic. I figured out that the two investment vehicles that had the most potential in my mind were precious metals and rental properties in Alberta. For the last 4 years I have been invested in precious metals, and having nothing to show for it. The price of silver is back where it was 4 years ago.

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