The Best Investment: Knowledge and Skills

To WIN, The SMARTEST and BEST INVESTMENT IS to OURSELVES.

One of the core principle in investment is: Low Risk, Low Return, High Risk, High Return, Lower Risk, Lower Return, Higher Risk, Higher Return. So, according to that principle, then, the Best Investment of all is the investment exposed to the Lowest Risk with Highest rate of Return. Is it real? In my opinion, while it is possible, it is not highly probable, especially during this era.

Because of its low probability, then, to fit the reality, we must rephrase the principle. The Best Investment of all is the investment exposed to the Lower Risk with Higher rate of Return. The greater the margin between the risk and the rate of return, the better.

Although the core principle is very clear, in reality, it is not. Why? Because risk and rate of return are a subjective issue. Every people has different perception about what risk is low risk, and what risk is high risk. There is no single standard.

Same thing happen to rate of return. Every people has different perception about what is low rate, and what is high rate. Although rate of return can be measured in percentage, it is difficult to measure it when we have to add rate of risk as a consideration to gain such return.

To deal with that reality, of course, the single solution is to determine, WHO will determine the rate of risk and the rate of return? Who will manage the investment?

The answer to such question is very simple, that is our MOST TRUSTED person. Who is that? In my opinion, the single best and universally accepted answer is: OURSELVES. Certainly, there are lucky peoples who found and have trust-able persons to manage their investment. It is very good to be in such situation. (Please note, that judging any people's merit and character also require a set of knowledge, at least in the psychological field)

Because the most trusted person is ourselves, then WE MUST MANAGE our investment ourselves. Of course, in reality, this is not the only single factor affecting the investment.

Uneducated person managing an investment is like a 3 year old toddler (baby) driving an F1 racing car. She will lose the investment as the toddler certainly will not won the race. Therefore, before managing our investment in something, WE MUST INVEST in OURSELVES. EDUCATION is the only thing we could do to invest in ourselves.

By Education, we will learn something. We will have a knowledge about something. We will have some skill. Go to community college, or anything similar as that to learn some skill. We could also buy and read many quality books, especially about KNOW HOW books. Even better than buying quality books, we could borrow from the library. It means, to invest in ourselves, we need almost nothing at all (except our time of course).

Although what we learn in education may not be a knowledge of managing investment and financial matters, at least we will have a (some) skill(s). Our skill increase our value in the eye of any employer. We could use such skill to have any kind of career. To have a job means money will flow into our pocket.

Does that sounds like an investment? You put some money in advance for something, to get more money in the future? Of course, (and I believe) the answer is YES!

What is more? Our skills and knowledge are ours forever. We will not lose them. It stays forever (unless we are growing old and becoming a forgetful senior, or we got stroke acute). The result of that is, money flows and will always flows to our pocket forever (by working of course, please, do not be a lazy person).

After we invested in ourselves, then we could continue to the next phase. The next phase investment categorized as:

• Active Investment
• Passive Investment

Active Investment means that the investment is used by ourselves to finance some kind of profitable business. We are actively involved in a business that used the investment.

Again, to be able to have Active Investment, we must have the knowledge and skill to run the business. We must invest in ourselves first.

The beauty of Active Investment is, that we know that our investment is safe. It is in our hand. Although the risk of losing the investment is still exist (may be because of some technical mistake, or wrong judgment), we are very sure that the loss is not because of some foolish cause (like losing money to SCAMS or Fraudulent practice).

Passive Investment means that the fund is invested in other people's business. The Passive Investment could be:

1. Direct Investment like buying some business' stocks or bonds. It is called Direct Investment because the investment directly go into the business pocket, and the Business use it for its business activities.

2. The Passive Investment could also be an Indirect Investment, like Savings Account, Time Deposit, Mutual Fund, any Derivative of stocks and bonds, etc. It is called Indirect Investment because the investment goes through Intermediary Agent, like Bank (who will loan it to the Borrower or Business), or Mutual Fund Manager (who will distribute the fund to any kind of investment she considered as a good investment), etc.

Again, to be able to have Passive Investment, we must know who could be trusted, and which investment is profitable. That require knowledge.

How to require knowledge? Again, INVEST IN OURSELVES. LEARN something. Go to School, buy or borrow and read many quality books, work, and invest our money in the Active Investment, and the money will follow.

As a conclusion, the Best Investment with Low Capital, Low Risk, High Return, is to invest in:
- Ourselves, and
- Active Investment.

It is because it requires almost no money to invest in ourselves, and the assets (that is our knowledge and skills) remain our own forever, with the money flow to our pocket until we retire.

Now, tell me if it is not a winning investment, then what it is?

So, what do you think?

PS:
Comments and corrections are very welcomely invited.