Warren Buffett on the Best Investment You Can Make

The following is a guest post by Rich Avery from Life Compass Blog.

Warren Buffett, one of American’s wealthiest people, is famously followed for his investing views and strategies.  And why not?  As chairman of Berkshire Hathaway, Buffett has led his company, through acquisitions and investments, to exponential growth.  A $1,000 investment in Berkshire Hathaway in 1959 is worth $25 million today!

And yet Buffet, known as the “Oracle of Omaha,” is now talking about an investment that is even greater.  During the Q&A session at Berkshire Hathaway’s annual meeting in 2008, Buffett said:

The most important investment you can make is in yourself. Very few people get anything like their potential horsepower translated into the actual horsepower of their output in life. Potential exceeds realization for many people…The best asset is your own self. You can become to an enormous degree the person you want to be.

In an ABC news interview in July of 2009, when asked whether it is still important for families to send their children to college or higher learning, Buffett said:

Generally speaking, investing in yourself is the best thing you can do.  Anything that improves your own talents; nobody can tax it or take it away from you.  They can run up huge deficits and the dollar can become worth far less.  You can have all kinds of things happen.  But if you’ve got talent yourself, and you’ve maximized your talent, you’ve got a tremendous asset that can return ten-fold. 

He went on to say that he doesn’t mean that everyone should go to college.  And he added that learning communication skills are tremendously important for everyone.

Buffett recently appeared in an online animated series called the Secret Millionaire's Club in which he teaches kids about finance and investing.  Appearing on CNBC in July of 2009 to talk about this new venture, Buffett was asked, “What’s your hope that kids will take away from these episodes?”  His reply:

Well, one way or another you develop financial habits when you're very young.  And the habits you develop live with you for the rest of your life.  So if we can get through to some young people that it's better to be a little bit ahead of the game than behind the game, watch out for credit cards.  The most important message is that the best investment you can make is in yourself. Teaching them if something's too good to be true, it probably is, and so on.  If they learn those things the easy way through these stories early on, it may save them learning it the hard way later on.

…Like I said, the most important message you can deliver to a young person is that anything you invest in yourself, you get back ten-fold.  And nobody can tax it away, they can't steal it from you.  So we'll be trying to deliver those messages.  You have to do it with a good story.  They're not going to watch it to get a lecture.  They're going to watch it to get entertained, and in that entertainment we hope there can be a good message.

So, what are some of the best ways you can invest in yourself?

1. Create your own personal development plan.  A good one helps you define your preferred future (your dream life), clarifies your life’s purpose, evaluates your current reality in the basic areas of life (financial, family, career, health, spiritual, etc.), reveals your personal values for each life area (the beliefs that are important to you), sets well-defined goals, and creates a specific plan of action.

2. Be a lifelong learner.  Read good books and resources.  Take classes (formal or informal).  Attend webinars and listen to podcasts. But don’t stop there – you’ve got to apply what you read and hear, and take action! 

3. Surround yourself with people who will help you achieve your goals and dreams.  If you have friends or family who are downers all the time, or who don’t believe in you or your goals, get new ones.  I don’t mean that you replace your friends or family, but find some new ones to add to the mix.  We all need to have positive people in our lives.  And maybe you need a mentor or coach who can help you take action on your goals.

4. Improve your communication skills. Buffett mentioned this in one of the interviews.  Communication skills are extremely important today.  And not just in how to be a great speaker, but also a great listener.

What do you think about Buffett’s assertion that the best investment you can make is in yourself?  What do you think are some of the best ways to do that?

Comments

[Darren]

I completely agree with his point about investing in yourself. One way I've been trying to do that is by watching a lot less tv, and reading good books during those times instead.

So many people say they'd love to read more books if only they had more time. But if you cut out tv or other less valuable activities, then you CREATE more time.

Very admirable thing that Warren's trying to do!

[Money Reasons]

Warren is a stock market rock star!

I wish I read this list when I was in high school or even junior high!

I agree with Darren, please stop wasting your life watching lame show on television!

[Old Limey]

Of course, Warren Buffett is 100% right.
The only thing I would add is that you have to try to recognize "what" you are good at and "what" you enjoy doing as early as possible in life. Then, if that "what" that you like and are good at can provide a good way to earn a living and succeed in life then you know just where to set your sights and "what" to aim for.
In my own case it was an early grade school teacher that sparked my interest in Mathematics. She made it so interesting that I just couldn't get enough of it - there was never enough homework to satisfy me. Each set of homework provided the same enjoyment and satisfaction that many people get from solving puzzles or playing video games. The great thing about Mathematics is that there are no grey areas, there's only one correct answer for every problem which is why I liked it and why it played a major role in my career. There are also many careers for people that excel at Math. I have carried that philosophy over into other areas which I why I see things as Black or White and am not known to be wishy washy on anything. For example, I either love an investment or I hate it, there's no in between.

[ross]

I used to think Mom's biscuits were special, because she said she put a secret ingredient in them. Years later I asked her what the secret ingredient was, and she said it was “love.” Right then I felt like the biggest sucker in the world. After reading WB's advice, I bet you do too.

[Kristine]

Awesome advice from Warren Buffett! With these words of wisdom coming from one of the wealthiest people in the world, it only behooves us to listen to it and take action.

I think it's real easy to fall in love with a product rather than the process and plan. As we develop our financial intelligence, we become the greatest asset. Financial products are only as good as the people utilizing them.

[Ronald E. Barron]

Warren Buffett is like father of stock market, he help save stock market during recession period. He is our stock market rock star

[KH]

Excellent advice. Especially something that young mothers need to pay attention to.

I hear all the time about young womens' erroneous "zero sum" calculations----"I can't hardly pay the daycare if I work, so I'm staying home for the next 10 years". The problem is they aren't investing in their careers during that time, and that irreversibly damages their later ability to earn income (to support themselves in a satisfying job that they enjoy doing). And many of these women will end up in the job market later even if they plan to be a "stay at home mom" forever. Divorce is very common and most families need 2 incomes especially when the kids aim to go to college.

[Susan]

I debated about whether I should insert my comment regarding staying at home with newborns and toddlers versus "investing in my career." I can unequivocally say that I would have never been able to proceed with anything worthwhile in my life after the birth of my children if I had not stayed at home with my daughters at least until they were three to four years of age. I returned to work even though our family lived very frugally. But those few years off were the best, an investment in my soul, if you will and hopefully, provided some kind of investment in the lives of my girls. After all, the truly finer things in life are immeasurable. That's my take on this.

[Concojones]

@ross: HAHAHAHAHAHAHAHAHAHAHAHA!!!
I agree that "invest in yourself" sounds a bit vague and cliché, and doesn't hit home. So let's try to make this specific. One example I can think of is FMF's MBA or any ticket that will improve your career prospects, or taking on an additional responsibility at work or in your community that will teach you something you want to learn, or allow you to meet interesting people.

The key is of course knowing what it is you're after. And that's not easy: I'm having a hard time right now coming up with things I want to learn. Improved social skills - that's one.

But, what else?

FMF, how about a blog post prompting the readership: how would you invest in yourself?

[Almando Gonzales]

Great advice and I want to start by changing my name, achieving more education and bettering my communication skills. If only someone would invest in my education.