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I frequently receive emails from young professionals asking me where they should be putting
their savings. They say that they want to achieve financial freedom. My response is usually 3
options and the stock market is always the last (and least recommended) option I give out.
Now before financial advisors and financial literacy advocates slam me for this article, allow me
to clarify: the stock market is a GOOD place to put your money. However, for young
professionals (including the feeling young), there are a lot of better options. And thats what this
article is all about.
The stock market is a good place to park your money. Over the long term, it has outperformed all
asset classes. Meaning, given the alternative options to invest in bonds, treasuries, gold, silver, or
real estate, the stock market has made more money for investors in most of the years.
The stock market has given a 12% average return based on a 20-year average. This means that
your P100,000 can turn into P2.99 Million after 30 years of just being patient. And if youre
actually a more active investor, you can even get 15% or 18% returns over the long term!
Now if this is the case, why isnt the stock market the best option?
The biggest downside to stock market investing is the waiting part. Every peso you put in today,
should not be touched for a minimum of 10 years. Its really, really, really for the long term. And
this is the primary reason why the stock market is only a good investment.
If youre currently employed, this is the set of services you are able to offer to society. This is the
reason why your employer, your company is paying you a salary. If youre a nurse, this is your
ability to care for your patients. If youre a teacher, this is your ability to transfer knowledge, if
youre a manager, this is your ability to coordinate and lead teams into achieving common goal.
For the self-employed and business owners, its the same thing! Its the set of goods and services
youre also able to offer to society. The only difference is rather than just having one employer
you have many. And you call them your customers and clients.
Your earning ability is your capability to provide value to the world. And the more value you can
provide, the higher the salary or price you can demand for your services. And with a higher
salary you can actually do more and invest more in the future.
So lets say you have P100,000. Which is a better alternative:
1. Put it in the stock market, wait, wait, and wait for 30 years until you get that 3 Million.
OR
2. For employees: Take a professional development course (MBA, Masters, a certification
related to your field) that will increase your income by by 5,000 or even 10,000 every
single month.
3. For entrepreneurs: Take a business course that will allow you to reach more customers
increasing your revenues by 100%?
Of course its 2 or 3!
Think about school and what school really did for your income today. We spent the first 10 years
of school just learning how to read and write. Understand basic arithmetic, laws of science, our
history. We learned home economics, basic household skills and so on Then as we got more
advanced, through highschool and college we learned how to write technical papers, make more
complex computations, understand bigger systems, world history, and how the world works.
And because of school we are now able to contribute to society. We have our earning ability.
And from there you can get your job, and from your job your salary! So thank God for school!
Imagine if Your Parents Didnt Invest For Your Earning Ability
With this, you might be wondering how you can increase your earning ability. So let me quickly
offer 3 suggestions (and dont worry because some of them will be FREE).
1. Take professional or certification courses related to your industry or business. Talk to
former students of the said course and ask if it has helped them in their careers. Maybe
you can even ask your employer to sponsor you in this course! (P25,000+ per course)
2. Read publications books, magazines or journals related to your industry and field at
least once a month. This will ensure youre always updated with the latest developments
of your field. (Cost P1,000+ a month)
3. Get a mentor. In your current job/business, reach out to a person who is 10 years ahead of
you in terms of results. Say that you highly respect them and youd like to learn from
them. (Cost: Courage + Cost of a Meal for your mentor)
You may do all or none of these suggestions, but the bottom line is you have to keep learning and
growing yourself.
But wait, theres more! Investing in your earning ability is actually just the second best option.
The best option is.
Its simple you explore and try out many things: Cooking, Skiing, Accounting, Gardening,
Teaching, Mathematizing, Coding, Traveling, Mountaineering, Networking, and all of the other
ings you can think of.
There are some things youll like, and there are more things youll hate. There are some things
youll be good at, while there will be more things where youll suck at. There are things youll
find really interesting, while there are things youll find extremely boring.
And the things that youre good at, you like and you find interesting are your HINTS on what
your passion in life is. Then once you have your initial list or inclinations. Its just a matter of
saying:
This is what Im passionate about.
Yes. Its that simple. And dont worry because you can change your answers later in life as you
experience more things!
But deciding on your passion is very powerful. Because once you say XYZ activity is your
passion, youve declared to the world and to yourself that in a way youll subconsciously start to
develop your passion.
Youll spend more time doing it. Youll take it more seriously, youll even spend more money on
it! And because youre actively developing your passion you become more passionate about it!
Your decision that youre passionate about it, becomes stronger and stronger. And being able to
do it, makes you happier and more fulfilled.
But before you reach the fulfillment stage, you need to start with first discovering and deciding
on your passion and purpose. And exploring the world it will definitely require some of your
hard earned savings. But thats okay! Because whatever you learn from these experiences will
last with you for a lifetime.
A Personal Anecdote on Passion
My passion in grade school was acting and speaking. Whenever there were declamation contests,
I gave it my all to be number 1. In high school and college, I was passionate about money and
finance. Majority of my allowance and savings went to purchasing books about personal
development and investments. Then after graduation, it went on to business where I simply tried
out (and failed most) business opportunities. Today my passion has been refined to teaching and
empowering people about personal finance.
Looking back, if I just invested my allowance in stocks, I wouldnt have a business today. I
would not have the fulfillment of being able to help thousands of Filipinos in achieving their
financial goals. This wouldnt be possible if my parents werent there to help me discover my
passions. And this wouldnt be possible if I stopped exploring, and developing my passions as
well.
So What Now?
This article turned out to be longer than expected (again). So lets sum up. The main point here is
not about avoiding the stock market. Rather its about making sure youre not missing out on
life just to be able to invest.
Invest a little in the stock market. But invest more in growing your income ability and personal
development. And invest even more in discovering and developing your passion in life.
This way, not only do you move forward in the game of wealth, but you also progress in the
game of life.
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3 Comments
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Guest
Reply 14 October 2015
So I suppose the stock market is still(may be) the best investment aside from personal
growth.
Peter
Reply 14 October 2015
Wow! Thank you J3! This is very helpful. Youre right. Finding and developing your
passion is a great way to find something worthwhile doing. Great stuff! Youve taught me
Peter
Reply 14 October 2015
Wow! Thank you J
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