For the Best Investment Opportunities Look Local
Let’s start with a question:
What is your largest asset?
Many people will respond with the following answers – “My home” or “my 401(k)”. Both of these answers miss a larger opportunity.
For many of us, especially those in early and mid-career stage, the most valuable asset we have is our ability to work and earn income. It is our human capital. Therefore, your best return will likely come from investing in growing your potential future earnings.
The most obvious example of investing in human capital is the effect of educational attainment on average salary. The Bureau of Labor statistics shows that a person with a bachelor’s degree will earn $23,972 more per year on average than someone with just a high school diploma.
That effect does not just apply to a bachelor’s degree, but also many other training and development opportunities. I have pointed out the following statistics in the past:
- CPA’s earn 35% more than non-certified tax professionals on average.
- Assistant project managers in the construction industry who have a LEED AP certification make about 12% more than non-certified professionals on average.
- Those working in operational roles who hold a Project Management Professional (PMP) certification will make about 9% more than non-certified professionals on average.
The Rockford area has outstanding educational institutions which offer these and many other types of income-enhancing growth opportunities.
Another local investment that pays huge dividends can be found in the Rockford region’s amazing non-profit community.
“Wait. Keith, isn’t ‘non-profit’ and ‘huge dividends’ a contradiction of terms?”
Hear me out.
Volunteering for a cause you care about can be incredibly rewarding on a personal level. Studies show that when you feel better about yourself you perform better at work and when you perform better at work, you tend to make more money.
By volunteering for causes you care about, you will naturally be around other people who care about those same causes, strengthening your social network. According to the book Social, by Matthew Lieberman, having a poor social network can be as bad for you as smoking two packs a day! So, in turn, having a stronger social network can improve your health. This could lower your health care costs and your employer and/or clients will appreciate you missing less work for health reasons.
Working with the board of a non-profit organization can teach you a lot about group dynamics, communication, and problem-solving. These are skills that employers say are highly valued in work settings. Board service looks great on resumes and being involved in your community shows initiative. All of these things greatly improve your earning potential.
Also, investing time and energy into a community-based organization makes our region a better place to live. Having a nicer community increases the value of our homes and provides greater business and economic opportunities. Think of all the great resources of our area! Many of them are only possible through the efforts of passionate volunteers. These organizations are what make our region such a special place.
So, if you are looking for the best possible return on investment, look at your largest asset. For most people that is your income earning potential – your human capital. As you get closer to retirement your financial assets will exceed your future earning potential and more care will need to go into managing those investments. Until that time, your greatest source of return will come from investing in yourself and your community. We are fortunate to have tremendous local options available for you to do just that.
Keith J. Akre, CFA, CFP® – Trust Officer
Opinions expressed are solely my own and do not express the views or opinions of Stillman Bank. Investments available through Stillman Trust & Wealth Management (1) are not FDIC insured (2) are not deposits, obligations, or guaranteed by the bank and (3) are subject to investment risk including possible loss of principal.
Note: This blog post originally ran as an editorial piece in the Fall 2019 issue of the Northwest Quarterly Magazine.