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I have recently read a couple of articles about what are the main ways to invest your money to protect them from being diminished by the inflation (I am living in a non-EUR EU country where inflation rate is somewhat lower than deposits interest rates and EUR deposits have virtually no interest rate).

These article mentions the following ways to invest:

  • stocks
  • gold
  • bonds
  • crypto-currencies
  • education

I have never been interested and did not like things related to economics and I was never tempted to try investing in any of the aforementioned financial instruments.

However, several years ago I began systematically investing in education (on-line and offline courses, conferences, books etc.) and this helped getting better jobs / with higher work related satisfaction. Also, I am trying to increase the sustainability (reduce the "biological decline" ), by getting more sleep, buying healthier food etc.).

Several persons in my entourage are arguing about investing in various financial instruments, so that they "make more money". Because for me doing the same thing would be both unpleasant and time-consuming, I would trade-off investing in education and sustainability for this.

So, I am wondering if from the financial perspective my option is viable: trade-off possible gains through financial instruments to potentially gain a longer active and healthier life.

Question: Is investing in education and a sustainable life a good alternative to investing in stocks, gold, land etc.?

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  • "investing would be ... unpleasant and time consuming". It doesn't have to be time-consuming. Get a low-cost whole-market index fund and set up a monthly transfer into it. – Ben Voigt Sep 14 at 20:56
  • Well, if you educate yourself on how investment works and behaviour come along, is it not an education? – mootmoot Sep 18 at 7:40
  • Looking at it as a competing option is the wrong thing to do, I would like to see it as having a complementary nature. – Leon Sep 18 at 8:34
  • To me, financial (economical) sustainability is one aspect of sustainability. In that sense, it is not an alternative, but an integral part of a sustainable life to also get your finances into a sustainable (or even better: resilient) state. – cbeleites Sep 20 at 10:08
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Money is a means to an end. If your goal is to live a happy life, then investing in things that make you happy in the long term is a good investment. But that long term is relevant. Buying nice food now won't prevent being hungry in 20 years – you will also need money later. Therefore, using money immediately and investing money for later use are not alternatives – they are complementary strategies to sustainably reach your actual goals.

Education is a bit special. Learning stuff for the sake of learning does not have a good ROI, but may be still be totally worth it if it makes you happy. In contrast, gaining experience, getting degrees and qualifications, and doing some networking may allow you to move to better-paying or lower-stress jobs, thus either improving your means later or improving your immediate happiness. You also have to consider the opportunity cost of education activities, because that time could also have been used for earning money directly.

Whether any investment (whether into a financial instrument or your more immediate circumstances) is worth it depends very much on your personal situation and goals. It is perfectly fine to not buy stocks. And it isn't worth dedicating a lot of your time to the search of new investments (hobby investors tend to perform really badly – your friends are unlikely to get rich). However, if you completely ignore financial instruments you might not have the means to fully enjoy your life later. But only you can decide on the correct balance between money for now and money for later.

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  • Thanks for the quick answer. Actually I have just realized that I not completely ignoring the financial instruments, as I am contributing to a private pension fund ( the company also contributes with an amount that is tax free) which uses a bunch of financial instruments to get an efficiency greater than deposits. Clearly this is not enough though. – Alexei Sep 14 at 14:54
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    @Alexei Why not enough? Private pensions can be a very good part of a solid financial plan. They often have benefits such as very advantageous taxation, on the other hand they tend to invest in low-performing but low-risk assets such as bonds, and you may have restrictions when/how you can use that money. In contrast, investing in equity/stocks is much more risky but potentially better performing and more liquid. – amon Sep 14 at 15:30
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    @amon: The problem with pensions (or US IRA/401k plans &c) is that the money is basically locked up until you reach a certain age. So while they should be PART of a financial plan (especially if tax-advantaged), they shouldn't be the whole plan. Having access to money from other investments gives you a great many options. – jamesqf Sep 15 at 18:13
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No.

Investing in education and a sustainable life is not a good alternative to investing in financial assets.

A key maxim of investing is "don't put all your eggs in one basket". Formally, this is known as diversification.

By investing in education and a sustainable life in lieu of financial assets, you're focusing your investing on developing income from a single asset class: your labour, which is inherently limited and prone to significant fluctuations and interruptions.

Some investment in your education is advisable. Education can lead to a better income, which provides flexibility and the capacity to invest in other things.

However, counting on a single source of income over your lifetime is inherently risky. People get disabled. People find themselves out of work for no fault of their own. People get tired of work and eventually want to retire and do something more relaxing that might not be income-generating. As a young person, you might not appreciate these possibilities, but you ought to allow for the chance that you'll change your mind.

I suggest not looking at investing in financial assets as merely a way of keeping score. You also don't have to be interested in financial assets in order for them to serve you well. I'm not interested in tooth brushing or the body of knowledge behind dental hygiene, but I regularly brush my teeth because the alternative frightens me. I know brushing my teeth is good for me.

So consider investing in financial assets as a means to achieving financial independence. You want that, right? Investing is financially good for you.

Having a job — even a great one that you enjoy tremendously and truly excel at — is not considered financial independence. When you rely on income from a job, you're still dependent on somebody else choosing to pay you to do your job. Real financial independence is the freedom to choose what you want to do and not be forced to make decisions because you need a paycheque.

A diversified approach doesn't overlook investing in yourself — it's one part of the whole. Concern yourself with the whole, even if the other parts aren't (yet) particularly interesting to you.

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  • Read the first couple of paragraphs and wanted to yell "no" in a comment.... But you raise a good point that a lot of people aren't considering. – xyious Sep 16 at 15:53
  • +1, but I find the wording in the first sentence somewhat ambiguous: alternative may be read as "one of the many things I do" (inclusive) or as exclusive "the only thing I do of the many possibilities". It's the exclusive variant that's bad, not the inclusive. While that becomes clear in the rest of the answer, it may still be worth clarifiying that first sentence. – cbeleites Sep 18 at 8:59
  • Moreover, a solid financial background greatly enhances the possibilities as employee: you can walk away from a bad job, and you have a much better negotiation position for a good job - you can afford to look for one that makes you happy personally and financially. – cbeleites Sep 18 at 9:02
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Those things related to economics are integral to humanity. Ignore it at your peril.

Is investing in education and a sustainable life a good alternative to investing in stocks, gold, land etc.?

(This question gives the strong impression that you're young, very intelligent, and highly naive.)

  1. Before answering the question, you must define what "sustainable life" means.
  2. You seem to be assuming that this is a binary either/or question.
  3. You have to do something with all the extra money that you're earning. At some point, "even more education" fails because of the law of diminishing returns, and "hookers and blow" (or since you're young, more video games) eventually suffers from the same fate.
  4. Eventually, you going to retire, and State pensions are only enough for a minimal existence.
  5. You can't sustain yourself very well if you're educated, old and eeking out a life on that State pension.
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    I was about to post an answer, just to make your 3rd point. I really think it's the strongest argument possible. If I have an investment account and I double it's balance, I get twice the return. That always works. I can always double the balance and get double the return. But, for education, it will very quickly be the case that doubling the number of degrees you have, or the number of classes you've taken, has little or no impact on the return (salary) you get. – dwizum Sep 16 at 16:11
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There are some basic misconceptions here. First, gold is not an investment, it is at best a storehouse of value (against your currency inflating, or political events destroying its worth). At worst, it's a gamble that world events will lead to the price (in real terms, not just e.g. inflating dollars) increasing.

Cryptocurrencies, at their present state, are a pure gamble on rising prices. They have no inherent worth, and the market for them could potentially disappear tomorrow. Even (or especially) if they ever became widely accepted, they would just be another storehouse of value, no different than keeping a bunch of $100 bills under your mattress.

Education might or might not be a good investment. Education for a degree or profession certification certainly can be an investment - the money I invested in CS degrees has certainly paid off quite well :-) OTOH, the main purpose of such degrees is to convince potential employers that you are able to do the work. If you just want to learn something for your own pleasure, then it usually need not cost any significant amount of money, and the expense should be filed under recreation, not investment.

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Education takes a lot of work to convert into money. Technically, all investments require work:

  • Stocks require trivial work, you only have to login to your broker and click the button
  • Gold requires a little bit of work, you have to go online and find buyers at a good price
  • Land requires substantial work, you have to build things on it, farm it, sell it (which takes time and work) or rent it (which takes time and work)

Education is at the extreme end of this. Yes, you can spend 200k on a college degree which doubles, triples or quadruples your salary. But you will have to actually work full time to get that salary. If all full time jobs are the same to you, no problem, but it's also important to consider how suited a given career is to you personally. Also, the college degree is not just handed to you as soon as you cut a check, you must also work very hard to get it at all. Similarly, for the cost of a library card you can learn a great deal about business and finance, but there is the hidden cost of all the hours you spend reading.

Education is certainly a worthwhile endeavor. I seldom see successful people whose journey to success did not involve education which was somehow relevant to their chosen area of business. It is rare that someone becomes successful by simply buying things without any education at all, not even in the thing he is buying. But on the other hand, you can certainly spend your whole life educating yourself without having a penny to show for it in the end. So education is important, but there must be a point where you dial down the education and start converting it to actual success (unless you define success as education).

Unlike many other investment instruments, the market for education or investing in yourself is neither efficient nor liquid. There are many education options out there which are overpriced or a waste of time (and money). Worse, the government doesn't recognize education as an investment so many legal protections for investors do not apply to "educational" investors. But on the other hand, you also don't pay a tax on knowledge (yet). So it is an area where information is much more scarce, and making rational decisions is harder.

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