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What are the best investments? What is the best return on investment possible? Everyone around you has that best investment suggestion. On your way home from work you may have even been pitched a few great investments that you absolutely cannot miss – if you listen to your radio, or spotted a few billboards along the way. We’ve all seen those infomercials, whether it’s a new stock or a quick flip real estate opportunity the truth of the matter is that none of these investments will come even close to providing you with the best returns possible.

Why do I speak with such conviction on this issue? Simple.

The risks of you losing most of your money in these investments and others far outweigh them ever-producing real tangible wealth for you. Even if you purchased say $500 worth of equity and it rallied 100% over some period – whether it’s one day or one year, you still only have $1,000 – that is before fees and taxes. Sure, you could argue that if you had invested $10,000 and the stock rallied the same 100%, you would have $20,000. That’s surely a valid statement, but unlike all the commercials you may come across, none of this is easy, nor rarely do these types of gains happen on the first attempt. More realistically if you start off with $500 and even if you are doing everything right and you have done your research, you very well may need to prepare yourself to lose 50% first, before experiencing any impressive gains.

Best Way to Invest Money

Now, I am not attempting to dissuade you from investing in stocks, real estate or other speculative instruments. What I am trying to do is to prove a point. The best investment you could undertake and the best return on investment you could fathom to experience is an investment in yourself. No need to get sentimental and grab the Kleenex, I am not being melodramatic. I will reiterate this once more because it is important – the best investment is you. The power within you, whether you realize it or not, is far superior to any stock or real estate investment.

It doesn’t matter if you are starting with an extra $100 or $1,000, every penny that you invest in yourself in the form of enriching your knowledge on topics that you are passionate about will invariably at one point or another compound with opportunities with returns that nothing else can beat.

Listen, a 5-year Certificate of Deposit (CD) pays you 1.83% as of February, 2017 – that’s a monstrous $9 income over five years! What if instead you spent a few bucks and attended a shop class if you’re an aspiring engineer, or purchased an online class about business (not an endorsement) and real estate, or the stock market. The options seem almost limitless!

Best Investment Without Risk

If you are familiar with the concept of compounding, then you will agree that the best return on investment possible is one where you are in control of the variables, one where you are the investment itself. In case you are not familiar with the concept of compounding check out this article I wrote about debt and why your home is not an asset but a liability. If you are buying a home for $250,000 and think that is your only cost, think again. Using the example in that article, your cost is some $200,000 greater, or roughly $450,000.

If you are not sure what you are passionate about or what you can study ask yourself a simple question – what am I passionate about?

It is not a good idea to study real estate just because your uncle bought a house and flipped it for some solid income. If you are not passionate about something, you will not spend the necessary time perfecting your craft, which means the risks are heavily not in your favor and you are putting yourself up to lose. Passion will lead to dedication which will ultimately result in success. No road runs in a straight line up or downwards, so the passion will force you to possess the willpower to get around when the road becomes rough. Most importantly, focus your passion on providing value to others. Concentrate on giving value, and the recognition of that value which you provide will find you in the form of monetary compensation.

Not The Best Investment Options 

For some of you who may nevertheless not be convinced, here is a typical list of ‘rubbish’ you may have found online when looking for best investment ideas with the best return on investment:

  •     Savings Account – I am certainly for saving so I have nothing against this option, but the title of this article is “… Best Return on Investment” which a Savings Account fails to deliver as compared to alternatives.
  •     Roth IRA – A neat option that permits you to save all your gains tax-free. Keep in mind that your cost is waiting until you are in your 60’s to withdraw without penalty. If you are in your 20’s or 30’s, do you believe that in 30 or 40 years from now the laws will be the same and still in your favor?
  •     Cash Back & Credit Card Rewards – Certainly not an investment, but it doesn’t hurt (if you pay off your credit card bill every month in full).
  •     Certificate of Deposit (CD) – How about that $9 over five years? Not a great investment.
  •     Money Market Fund – Not much more dependable than a CD.
  •     Treasury Inflation Protected Securities (TIPS) – Not worth it. Let’s just say you’re getting less money than with a CD.
  •     Municipal Bonds – The tax incentive certainly helps as it’s exempt from the Federal income tax – but is this a low-risk investment? Certainly not, ask Puerto Rico or Detroit.
  •     Stock Market – It’s great, but unless this is your day job it doesn’t beat the compound returns from enriching your education.

Unfortunately, there are several great investments out there, and everyone who is attempting to sell you something will tout their investment as the best. It’s really much simpler than all that. Invest in yourself first and foremost. The greater your knowledge, the more it compounds and the better decisions you can make and the more value you can provide to those around you.

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