Want to be Good at Investing? Learn to Invest in Yourself First
I recently spent an evening with a group of accomplished, smart women from a variety of generations. The wisdom of these ladies blew me away. We had an empowering conversation about life lessons and hard choices. And one of the topics discussed was the need to invest in yourself and in relationships.
But what qualifies as this type of investment? And how is it analogous to investing in a financial portfolio?
What if I told you to take at least 5% to 10% of your income and funnel it back into your own personal development? Does this seem like an indulgence? I thought so at first, but let’s talk about what that means, and how it can pay meaningful dividends.
Why It’s Important to Invest in Yourself
Maybe you hire a personal trainer to get your health on track. Or a life and career coach to get your mindset right. Or you explore your creative side by learning a new language, painting, or gourmet cooking. Nurturing your mind and body enables you to have more to give now and in the future. That might be more energy, knowledge and compassion. Or greater physical strength and mental endurance.
Investing in yourself is analogous to investing in the bond market. It yields not only future returns (‘principal’), but often a current pay-off (‘coupons’). Stable, trusty bonds are an essential component of a well-designed portfolio. And when markets turn upside down, you never regret owning bonds. Just like you are never sorry about investing time and money on your health and mindset when a personal challenge arises.
In 2021 for me this means ‘indulging’ in mail-order smoothies to up-level my nutrition game, (which had fallen off a cliff in 2020). The safest way to be successful is to invest in your own personal and professional growth. For others in our group, it was allowing space in their busy schedules to volunteer or explore a previously untapped passion.
Convert Your Life Lessons to Financial Ones
If bonds are like investing in yourself, what are the stocks? In a portfolio, the more volatile component is stocks. Stocks are risky, but they can have a higher return than bonds. Similarly, investing in relationships has more risk than simply investing in yourself. But this investment can have an even bigger pay-off.
Relationships take time and energy. They take vulnerability and honesty. You must risk intimacy. You must risk pain. You must risk rejection.
Occasionally, an investment in a relationship can be a complete write-off. Have you ever been at a party and realized, “These are not my people”? Or tried to find a career mentor but struck out? Or been in a relationship that started well, but does not serve you anymore?
These experiences are similar to investing in a stock and then watching it drop by half. You may hope against reality the value will recover. But I know from experience that hope is a terrible investment strategy. While the pain of loss can feel brutal, sometimes you just need to take it and move on.
Feel the Fear and Do It Anyway
It’s really hard to invest in deep and meaningful relationships. In fact, I actually have an easier time investing in myself. I can motivate myself to go to a yoga class, train for a race or read a personal development book. But to risk rejection? More challenging than running a marathon.
However, I’d argue that a vast majority of the “investment” you make should be in relationships. Why? Because just like with stocks, the gains compound faster. Because the opposite of loneliness is friendship.
When coronavirus hit in March of last year it was a confusing, lonely and strange time. I wrote a reflection for that month and went back recently to read it:
“Taking a leap to start my own business full-time is scary and exciting, (although I need to work on my timing). I recognize now that relationships are everything. It was a tough month. I was grateful to my clients, friends and family for supporting me and grateful to God for the opportunity to reflect upon all I have taken for granted.”
The day I quit my corporate job the stock market was limit-down, which means it was an awful day in equity markets. One of my colleagues at the time called it “Mindy's Black Monday”. It was an incredibly challenging month for me (and for the world).
I recognized immediately I would not have been capable of handling so much disruption and transition at the same time if I hadn’t invested in a support system. I will be forever grateful I built the right “portfolio” of mindset, health, and friendships to handle the uncertainty.
Live a Truly Wealthy Life
Investing in your personal life gets reflected in every aspect of your life, including how you approach your money. You start to understand what “payoffs” really matter. The wise women I discussed this topic with concluded this is true no matter your age, income or gender.
The best investments are only clear in retrospect. With many of my relationships, it feels just like I invested in Amazon at the IPO.
If you would like more guidance on how to build an investment portfolio you can feel really good about, I’d love to chat and see how I may be able to help. Please do reach out and schedule a free introductory call.
Choose your investments wisely, my friends. And be sure to let your winners ride.