During the planning process, prospective clients often ask: “Where should I invest my money for the greatest returns?” A seemingly simple question, but in our opinion, it is the wrong one to ask your expert financial advisor. No return is without risk and higher returns usually involve higher risks. Investing in illicit activities will probably give you the greatest returns, but are the risks of jail time, or worse, worth it? We encourage our clients to rather ask, “How much risk am I willing to take?” Or, put plainly, “How much of my investment am I willing to lose?”
The second most important investment you can make is in yourself. This means investing in a business, an education, or both. Both have risks, but we are usually too young or ignorant to care about them. If you study more or longer, you lose more time which is your most precious resource. Both investments can have health implications, neither are always enjoyable, and the list can go on…
Nevertheless, successfully investing in yourself will reward you with a sustainable, long-term return that far outpaces any traditional investment you can make, even after adjusting for the associated risks. In one well-known example, the US business magnate and investor Warren Buffett said that you can improve your value by 50% by honing your written and verbal communication skills.
Of course, investing in a business has many other risks for which entrepreneurs could potentially be handsomely rewarded. Unfortunately, too many people who invest in themselves stop around their thirties. They become uncompetitive and the return on their investment will suffer. Maybe it’s time to start investing in yourself again?
It’s challenging to determine a client’s next best investment from a risk-reward perspective. In many instances, investing directly in your health, happiness, or even social constructs can improve your wealth. That’s because healthy, happy, engaged individuals work harder and often earn more. On the other end, directly increasing your wealth can generate handsome returns in the long term. This is why the cookie-cutter approach to financial planning doesn’t exist when you partner with Efficient Wealth. Everyone’s needs and objectives must be considered independently. In doing so, we plan for you to live a life of wealth, health, and happiness.
Speak to the Efficient Global Investing team today – click here!