I was reading the forums this week, when this question popped up. Sure there are some generic answers: “you’re young, enjoy life”, “don’t worry so much”, etc. But there was a couple of answers that hit right at the heart of what we talk about at Business Minded.
“Spend less time worrying about investing small sums of money and focus on growing my career. Must have spent 100’s of hours reading forums, reading books, local real estate listings and figuring out which ETF was perfect for my small amount of savings.”
This lady, or gentleman, is not your typical internet forum troll. The lesson that they are trying to impart here is both essential and ageless. No matter how old we are, if you are working in a career, you can increase your earning potential. We can increase what we are worth, by being able to bring more value to our customers, whether those customers are inside a company or external clients. By increasing our value, we are rewarded far in excess of the rate of return on the stock market.
The earlier we begin to invest in ourselves, the more we will be able to earn in our lifetime. And that can have a dramatic effect over the course of several years.
There is no better example of this than a situation I advised one friend on. Andy (not his real name) found himself in a particularly wonderful situation early in his career. He had two opportunities on the table, his current job (Job A) at $ 70,000 annually, or an offer on the table (Job B) for more responsibility and a $ 85,000 annual salary. Seems like a no brainer right? But as always, there’s a complicating factor. Job A was offering an investment opportunity for equity in the company. The expected return was 400% after 5 years. With an astronomical return like that, the decision just became a lot more complicated.
From a numbers standpoint, the opportunities would be equal if Andy made 15,000 * 5 years = $ 75,000 on the investment deal. At a 400% return, that means an initial investment of $ 18,750. Andy has on hand approximately $ 30,000 to invest in Job A’s equity, which would result in $ 120,000. With a 5 year lens, which for many of us is beyond where we can reliably predict, Job A is far superior, to the tune of $ 45,000.
But what happens after 5 years? How far does that $ 45,000 advantage go?
The skills we develop pay off now, but they keep paying us dividends into the future. A higher earning potential leads to our ability to generate substantial resources over the course of our careers. The job experience alone from an earned promotion can raise our financial outlook to untold heights, as we grow and increase our value.
Back to Andy, assuming his earning potential increases at the same rate for the rest of his career, 20 years from now with $ 15,000 extra per year leads to a gain of $ 300,000. That far in away exceeds the return of the $ 45,000 investment from Job A. When faced with the numbers, the decision became clear, Job B was the better route.
How much time do we spend worrying about our investments right now? How valuable could we become if we spent that time learning, growing, increasing our earning potential?
Investing in ourselves has the highest return on investment out of any investment we could possibly make. And the right time to invest is now. Invest in yourself. You can increase your value, and improve your future for the rest of your life.
Unsure of what the best way to increase your value is? The Career Growth coaching platform is designed to help you take control over your professional growth. Check it out here, or send me an email directly to [email protected] to discuss if our program is the next step to take you to greater professional heights.