I’m sure you’ve heard over and over again that investing in yourself and your business is the best investment that you can make.
But is this actually true? Do the numbers prove it?
If you were to measure the return on investment (ROI) of investing in yourself vs. putting your money in another investment vehicle like index funds, real estate, or a savings account — where would be the best place to put your money?
Here are the average ROIs for investing in these popular investment vehicles:
Index funds: In the last 40 years, the average annualized return of the S&P 500 Index was 11.69%.
Real estate: For almost 7 decades, the return on real estate has hovered around 8–9%.
Savings accounts: Currently, the average CD savings account yields less than 3%.
Now here is the ROI that these entrepreneurs have seen after their initial investments in their business:
Sara Blakley, Founder of Spanx: Invested $5,000 in her business, now has a net worth of $1 billion. ROI of 199,999%.
Kevin Plank, Founder of Under Armour: Had only $20K in the bank and put $40K on credit cards to launch his business, now has a net worth of $1.7 billion. ROI of 28,332%.
Sam Walton, Founder of Wal-Mart: Sam made a personal investment of $5,000 and borrowed $20K from his father to launch Wal-Mart. At the time of his death, he had a net worth of $8.6 billion. ROI of 343,999% and Wal-Mart continues to generate wealth for the Walton family today.
Now you may be thinking, Sophia! I’m not a billionaire, how is this relevant to me?
Well, I’ve seen similar ROIs for entrepreneurs like you and me who have invested in themselves and their businesses, so these examples are not wholly unrelatable.
When your startup was making $0, did you spend time and money on your business taking digital courses, watching how-to Youtube videos and articles to help you launch? Are you making enough money to work on your startup full time now as a result? It’s likely you’re seeing an ROI above 10,000% from that.
When your startup was in a crucial growth stage where you wanted to grow from $80,000 in revenue to $100,000 in revenue, did you spend $2,000 on an e-commerce course to improve your e-commerce store? Even if you only saw a $1,000 sales boost in the first month as a result, you still got a 50% ROI on that e-commerce course within 30 days.
When you start really looking at your numbers from the times you’ve invested in yourself, you can see how investing in yourself and your business will always be a better investment than investing in anything else.
On top of that, investing in yourself and your business doesn’t have a cap and has numerous non-financial returns.
As you can see from Sara Blakley, Kevin Plank, and Sam Walton, their ROI continues to grow as every year passes and they returns don’t have a cap like index funds, real estate, and savings accounts do.
The non-financial returns of investing in yourself is also plentiful — you learn and grow on subjects that are transferrable beyond entrepreneurship. Entrepreneurship challenges you relentlessly and carves you into a better person as a result.
So if you’ve ever stopped yourself from investing in your business, enrolling in that course, hiring that coach, or going on that small business retreat because you were worried that you wouldn’t see any return from it, shift your perspective.
Stop focusing on how much money you’ll lose at the moment, and focus on the returns you’ll get next month, 2 years, 5 years, decades from now by investing in yourself and your business.
You have no cap and your returns have the potential to continuously pay off and increase for the rest of your life (or in Walton’s case for his future generations as well).
Like any investment opportunity — do your homework. There are plenty of entrepreneurs who have invested in their business and have lost money as a result. To enhance your probability for success, do your due diligence, get professional help, and make sure that your investment is a sound one.
There’s currently no investment opportunity on the planet that’s better than you and your business. The numbers say so.