The best investment you can make: Yourself

“I’d love to make some asam laksa one day”, my wife would tell me as I slurp down the last few precious drops of that tamarind nectar.

A different day, a different ambitious. Like kuih lapis. Or seri muka.

Noting her enthusiasm, I’d ask, “Why don’t we just buy?”

Why make it ourselves, when artisans are selling affordably what they have taken a lifetime to perfect? The best asam laksa, the best kuih lapis. I would happily pay for that.

Either way, I win. I get to play guinea pig for a delicious home experimentation or we eat out something expertly crafted.

The problem with home-made

Moments like these make me wonder, is DIY all it’s made out to be?

It’s the perennial question of whether the time invested in learning something is worth it. Specifically, this being a personal finance blog, I’m asking if you need to invest in learning how to invest.

There are loads of financial gurus/Facebook ads out there that want to teach you how to be rich. The financial media virtually puts learning how to invest on a pedestal, a virtue that’s on par with maybe CSR or saving the environment.

Here’s a question: when you learn these ‘ways’, are you getting the results as advertised?What if you think you needed to do it, for survival or whatever, but really hated doing it?

In fact, this applies to any money-making endeavours outside of your job, including getting a side gig or moonlighting as freelancers. With today’s high costs, working a second job, with Uber, for example, has earned the revered status of being A Necessity. And there’s nothing wrong with that.

But I think doing too much of these things can harm your career, whether as a potentially highly-paid employee or as an entrepreneur generating active business income.

Investing can be both a time-consuming hobby and a pain-in-the-ass second career.

We should never learn investing or [insert advertised money-making course] at the expense of:

  1. Developing ourselves, and
  2. Developing our relationships

These are two sides of the same great coin that will help propel us to what we see as greater heights.

There is an art to learning which leads to a definition of success that goes beyond monetary wealth, for example, meaning, fulfilment and happiness.

On the other hand, the lack of self-development will lead to the opposite of those things. Mistaken, enforced learning is cancer which slowly kills the important stuff.

The world that craves filthy-rich and doesn’t know the meaning of wealth

There are people lucky enough to make money rain doing something they love. Celebrity chefs, star footballers, etc. They are living the life. The rest of us work to pay the bills.

We have not arrived at the level where we’re doing something we truly love and getting paid well for it. We work for survival, the money, the hope of a better future. It’s a long treacherous journey.

While it’s obviously nice to have a lot of money, countless research has shown that after a certain wealth level, more money doesn’t push the happiness needle.

This doesn’t stop some people from fantasising about the unattainable. But others look for something more elusive: meaning.

From a wealth viewpoint, meaning could mean being debt-free, having that rare commodity called Time, possessing and giving Love and sticking to your principles. It can’t be denied that it’s easiest to have these things only after a certain, but not necessarily obscene, level of wealth.

This has been referred to as fuck-you money, defined as when you’re not rich enough to own a private jet but rich enough to say “fuck you” to money-making schemes you hate or disagree with.

Self-Developers vs Self-Investors

I made a spreadsheet comparing 2 types of people.

Let’s set the scene:  Two personalities. The self-developer is Career-Minded Karen. The self-investor, Trader Terry.

Both of them start with a 2k monthly income at 25. Career Karen, being more focused on being good at her job, grows her salary 10% annually. She achieves top coder status at the peak of her career, taking home a million a year, travelling regionally. 

Trader Terry, being distracted by the glitter of DIY stock-investing, has less time for career development and grows his income at a slower 5% annually. This is good enough to beat inflation and he takes home under 200k at his peak as a button pusher in a dim room.

They both save one-third of their salaries. Two-thirds of that go to EPF, self and employer, assumed to earn 5% returns p.a.  

The remaining one-third of non-EPF savings are invested according to 2 styles: passively for Career Karen and active stock-picking for Trader Terry.

Career Karen desiring more time for herself, automates her investments with a robo-advisor, getting a smoothened average of 8% returns annually throughout her career.

Trader Terry gets 20% p.a. for having discovered a sure-thing investing system. It’s probably very hard, if not impossible, to consistently get this number but I’m assuming the unbelievable just to make a point.

Adding up EPF and non-EPF returns: Karen gets a subdued 6% p.a. and Terry gets a more torrid 10%.

The results at retirement at 65? 

She eats free-range, runs a good 5k and flies budget to glamping destinations with her family. She keeps her pro bono tutoring of underprivileged children hush-hush.

He is overweight and sleep-deprived. But he gets to show off his well-groomed pedigree miniature dog, caviar consumption and Porsche on Facebook.

Both have sizable assets. But Karen still ends up with not a small difference more than Terry at the end of their careers. She beat him by growing her salary quicker and saving more.

And I know of many who had clocked even faster wage growths than Karen just from their day jobs.

Worse for Terry if I tweaked down his unrealistic investment assumptions. It will be bye bye to caviar.

Screen Shot 2017-12-07 at 9.41.26 PM

Obviously, this is all purely hypothetical and any similarity with fictitious events or characters was purely coincidental. But it’s a reality that there are many more successful people doing their jobs well than there are rich people having executed a market trading secret.

My career in investment banking tells me that for most equity or bond salespeople, fund managers, or research analysts, it’s doing their jobs cleverly that gives them their obscene packages rather than a success in personal trading. Typical job specs are less glamorous than you think: writing boring reports, entertaining clients and troubleshooting rather than making accurate market predictions.

A few observations from here:

  1. You won’t lose out not knowing how to stock-pick or play the forex market or not listening to a financial guru etc
  2. By saying no to time-consuming investing techniques (unless you love them), you’d have a lot more time for things that matter
  3. You’d have to be extremely lucky to make it big in stock-picking, playing the forex market, poker, football betting, horse racing etc

This is how you earn more than investing

You might have heard of Warren Buffett. He got really rich through investing.

How about Tiger Woods? He’s a rich and famous golfer.

J.K. Rowling? You’re a wizard, Harry! First billionaire author but no longer. Her net worth is down to a miserly $650m.

These are all household names. Now, here’s something to think about:

Why do we see so many investing courses trying to make a Warren Buffet out of us? Well, one obvious reason is that we’re greedy.  It’s no fault of WB. The other reason is the course seller is greedy. But, ignoring emails from Nigerian princes, why don’t we see more get-rich courses from other professions?

Investing is a known way of working your money, sure. But to home-make a moneymaking box? Why isn’t golfing an option? Or writing a book? Or being a rapper? Why aren’t these courses more popular?

Learn my secret golf techniques and swing your way to wealth!

Get rich being a rapper or die tryin’!

We never see such ads. Imagine the entertainment value.

How to fund your holiday with dividends!!”

“Learn How You Can Create Consistent Income From The Stock Market Using These Proven Investing Skills!”

“Our value investing portfolio beat the market by 80%!”

“High Growth Investing Formula – how to select stocks.  Fundamental and important truths that everyone must know!”

“How FX trading saved my life and got me a girlfriend!!”

“As heard/seen on BFM, CNBC, Bloomberg, Starbiz, CNN, The Edge, Smart Investor aided by Bursa Malaysia, CIMB, Maybank, The Works!!

Now that sounds more legit.

Investing is an easy way to learn how to make money, many people might think. Is it really?

Can’t you be a rapper instead? A successful one gets very rich, so why don’t you learn proper rapping techniques? No, that’s just absurd, right?

Or you can commit to something you love, maybe something you actually want to do.

Within a career and outside of it, we should strive to find meaning in things we do. If you love making cake, that is more than a good enough reason to do it. If not, just don’t do it.

6 thoughts on “The best investment you can make: Yourself”

  1. I do think there is value to understanding financial literacy and DIY investing, at the very least, for the sake of personal development. One need not attempt to become Warren Buffet or Paul Tudor, but at least the basics of John Bogle would be sufficient to tell the difference between a good investment and a bad one in the markets. I would posit an alternative: be able to be financially-savvy enough to invest your earnings in order to get investment returns on it to allow you the financial freedom to truly pursue something you are interested in / hobby and make it a rewarding lifetime career versus working a 9-to-5 job you hate just because it pays the bills. Not truly the four-letter-word kind of money, but certainly a higher level of independence and freedom-kind of financial situation. Astutely investing in the markets, whether through smart allocation in passive investments or thesis-conviction-stock-picking (versus pure financial speculation), can significantly help in such an effort.


    1. on financial literacy, no arguments 100% agree. just as we don’t need to know how to bake the perfect cake to eat it, we would appreciate the cake more if we knew the basics of what made good cake.

      on your second part about being financially savvy, to me it’s the same as being financially literate, also agreed and it seems suspiciously like rewording what i’m saying 🙂

      but if by being financially “savvy” you mean knowing the technicalities of trading and investing, then no, absolutely disagree. this is usually the kind of advice given by investors who don’t see the need, perhaps rightly so, for savviness in areas other than their own or it is purely marketing driven (even if you’re unaware of it).

      no, there’s no need to be financially savvy in the investor sense because it doesn’t do much to raise your average returns above what asset classes already give you. anyone who could do it consistently is just plain lucky or filthy rich enough to make life-changing big bets.

      no you don’t have to be a savvy investor just like you don’t have to be a savvy baker, or savvy car builder because you can already buy inflation-beating investments, delicious cakes and good cars (spare a moment for the national car project monster).

      apoligies if i’ve read you wrongly.


  2. Yes. On point. Its annoying to see so many ads by investment gurus. But then again.

    What sort of robo adviser can churn 8% annually?
    Karen’s increment of 10% annually. Really? And salary of 80k/mth? Really? Even if there is such a job with such increment %, it must be stressful, long hours, and most likely only less than 5 positions per large cap company.
    With such a stressful Job and long hours, it is very doubtful that karen would live a healthy life let alone finding meaning in that job isnt it? (besides looking forward to her monthly payslip, but then again is it still meaningful?)


    1. Hi Jim you raise good points. These a very simplistic but not unrealistic assumptions. The S&P 500 has returned 8% p.a. in USD terms for the last 40 years excluding dividends. The FBMKLCI has done the same in RM terms for the last 40 years.

      You’re also looking at the smoothened career growth trajectories of two people. Char Koay Teow was 50 sen a plate 40 years ago. Today it’s RM5-6, a growth of more than 10x. So you got to put time value of money into perspective

      Liked by 1 person

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