From: alexhormozi
Rather than solely focusing on traditional asset investments like the S&P 500 or real estate for long-term passive growth, a more immediate and impactful strategy for wealth generation is to invest in personal skills and education . While traditional investments are safe over a long period, they limit the desire to actively generate more income, especially for younger individuals , .
Rapid Income Growth Through Skills
Consider the example of an 18-year-old high school graduate with no specific job skills beyond their diploma . By spending 7.50/hour) to $25/hour, effectively tripling their income for the rest of their life , , . This rapid return on investment demonstrates the power of investing in specific skills .
Earning Capacity as a Wealth Generator
Your ability to earn money is directly tied to your capacity to provide value to the marketplace and solve problems for others , . The greater the value of the problem you solve and the more you can charge for it, the more wealth you can generate , . This value can be delivered through services, products, or other means .
Strategic Investment in Yourself
To maximize earning capacity, it’s crucial to:
- Save Money Wisely: Being smart with money and saving provides more capital to invest in personal growth , .
- Invest Excess Funds in Education: Live as cheaply as possible and direct all excess money into education that directly increases your earning capacity , . For instance, if a phlebotomist earning 20,000, the remaining 25,000 after taxes) can fund significant educational opportunities , , , , .
- Prioritize Skill-Based Learning Over Traditional Degrees: While a four-year degree can be an option, it may not be the most effective in today’s marketplace , , . Spending $2,000 a month for four years on courses, coaching, mentorships, workshops, and seminars can lead to higher earnings than someone with a four-year degree, often within the first year , , , , .
- Focus on Active Income Generation: When building wealth, especially in fields like real estate, recognize that the richest individuals are actively spending their time in that field, not just passively investing , , .
Effective Learning Strategies
- Entrepreneurial Degree Mindset: View each course or coaching session as a “class” contributing to your overall entrepreneurial degree, rather than expecting a single investment to make you rich , , .
- Learn from Everyone: No single person will teach you everything. Seek to learn from multiple sources, utilizing free content (like YouTube or Instagram) to gauge value before making a paid investment , , , , .
- Replicate Before You Iterate: Before adding your unique style or “sauce,” first duplicate what successful mentors or courses teach , , , . This earns you the right to make iterations later .
- Complete “Bridges”: When developing a skill or business, see it as building a bridge with many “bricks.” Don’t start building new bridges (new ventures/skills) until you’ve laid all the bricks on the current one and reached your first milestone , , , , .
Skills Stack Expontentially
Skills build upon each other, leading to exponential growth in earning potential . For example, a videographer can stack skills like editing, social media messaging, copywriting, branding, management, operations, and leadership to broaden their horizon and become an entrepreneur or even a Chief Marketing Officer (CMO), dramatically increasing their pay , , , , , , .
The “SnMe” Investment
Instead of primarily investing in the S&P 500, direct your money towards “SnMe” – an investment in yourself , , . This type of investment compounds far faster than typical 10% annual returns, allowing you to double, triple, or even 10x your earning capacity , . The world’s wealthiest individuals demonstrate this principle by earning significantly more, highlighting the immense potential of investing in one’s own human capital , .