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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!

Asset Classes Part 3: Stocks vs Stock Funds

On Minimalist Wealth

Summary: Morningstar admits that low expense ratios can better predict a fund's future performance than their own star ratings.

Stocks have always outperformed bonds in any 20 year period, growing on average 7% a year with periods of huge decline.

What is a Stock?

Stock is a claim to the ownership and rights to the value of a company. You buy shares of company stock with the expectation that its value (price) will increase so you can sell your shares for more than you bought it for.

What is a Stock Fund?

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