S&Me > S&P
The best investment you'll ever make
Some of you are going to be angry after reading this, and I understand why.
Because we’re talking about a nine letter word that triggers people.
Investing.
Wait, don’t leave!
I promise not to bore you with compound interest charts + graphs pleading you to invest your Starbucks dollars so you can be a rich geriatric who never got to experience the joy of caffeine.
There’s already a plethora of articles, books, and calculators that do a fine job of covering that.
So I’ll save you the regurgitation.
No, no, no. Let’s talk about a less covered type of investing. Which if done right, will give you astronomical returns. Putting any stock, crypto, or real estate to shame.
But first, will you give me a second to cover a few basic terms? Then we’ll get to the juicy stuff.
Raise your hand ✋ if you’ve heard of the S&P 500 (S&P for short).
It’s a stock market index fund tracking the performance of the 500 largest publicly traded companies in the US.
And if you’ve ever cracked open a personal finance book, you know it’s regarded as the poster child of responsible investing.
The common advice is to dollar-cost average into the S&P. Which is a fancy way of saying, invest the same amount of money every month.
It claims to be a sure-fire way to financial well-being for all.
But it’s NOT.
Dare I say, it’s one of the least effective ways to invest our money.
And that hurts for me to admit, because I’ve been doing it for years.
You may think I’ve officially gone off the deep end. But stick with me if you want to find out why.
It’s commonly accepted that if you invest (say $500 a month) into the S&P, you’ll be a millionaire.
What’s omitted is that your bones will basically be dust by that time. And thanks to this pesky thing called inflation your $1 million dollars will be worth more like $250 thousand in today’s value. Yuck🤢.
Plus it makes a HUGE assumption. And what happens when you assume? My partner knows the answer to this one because I’ve asked her too many times to count…..
It makes an ass out of you and me.
It assumes your money will earn a consistent 10% return per year without a hiccup.
The problem with that?
The history of the stock market is filled with hiccups.
They happen with regularity. But never warn us when they’re about to come (much like actual hiccups).
The stock market is a volatile son of a b****. It doesn’t care if you’ve been dollar-cost averaging for the past 40 years and are about to retire. It could tumble 50% in year 39 without your permission.
So that $1 million dollar nest egg? Suddenly only $500,000. And guess what? You don’t have enough years left to make up for that dip. Unless you plan on living well into your 100’s. In other words, you got screwed by the S&P.
Not sounding so safe now, huh?
There’s an alternative. One that promises mind-boggling returns.
It’s you. You’re the investment.
It’s time to start investing your hard-earned money into the S&Me, not the S&P.
The only reason you aren’t earning as much money as you’d like is because you are lacking certain skills, character traits and beliefs.
We’ll focus on skills today.
The good news is that you can learn more to earn more.
The better news is that you can pay to speed up the learning process.
The best news is that the internet makes all of this available at the click of a button.
That’s right. We’ve got access to all the books, courses, coaches etc. to earn all the money we could dream of. There’s no excuse anymore.
We are in a golden age of information abundance that, if applied, can increase our earning capacity beyond belief.
It requires a mindset shift. And a little extra cash helps too.
First earn enough to cover your basic living expenses. Check?✅
Now it’s time to pour that additional money into the S&Me.
I don’t know what your current skill stack is, but here’s some good foundations:
Sell
Write
Speak
Build
Lead
There are world-class resources out there begging you to let them teach you these things.
I’ve spent significant sums of money to learn some of them. It’s been worth every penny. But I’ve still got a long way to go to get to where I want to be. So I’m making 2023 the year I start investing more heavily into the S&Me. Who’s with me?
You may think you aren’t cut out for some of these skills. But that’s a false belief that must be broken.
Why waste years of your life trying to learn from personal experience? You can pay to learn from those who have a proven track record in the real world.
Not to mention….
Skills compound faster than money ever could.
Learn the skills listed above and you could double your earning potential in a few years (or less).
I’ve never seen the S&P double that quickly.
So what’s my point?
Take that $500 a month and invest it into the S&Me instead of the S&P. And you’ll gain the skills that will make you rich.
A quick comparison then we’ll wrap up.
Imagine these two scenarios:
S&P Sal: He takes the “safe” route and invests $500 a month for 3 years. Assuming a perfect world where he got 10% returns each year, he’d have earned an extra $2,891. Not bad, right?
S&Me Sally: She also invests $500 a month. Assuming she learned + implemented what she learned to double her income from $50,000/year to $100,000/year. She’s got an extra $50,000.
No comparison.
And since there’s no cap on the S&Me, it’s possible you could be earning more than double (over 100%). Not 10%.
I wish I would have heard this advice and implemented it the day I started my first job out of college.
Those measly gains I made from the S&P could have made me a millionaire by now.
But no point in crying over spilled milk, right?
There’s still time.
For you and me.
No matter what our age.
I’ll distill this entire essay into one easy to remember formula you can leave with =
S&Me > S&P
Once you have the skills in your toolbox they can never be taken away from you. Now you just have to get your beliefs and character traits up to par. But that’s another story for another time.
PS - You should never take investing advice from someone who is still lacking a few zeros in his bank account :)
Disagree with me? Let me know in the comments.
Brilliant!
Start to finish. Memorable. Actionable. True.
Loved the voice in your piece Arman! I felt like you were talking directly to me! Good job!