"No other investment yields as great a return as the investment in education."
- Brad Henry
If you've been around here for any length of time (or choose to hang out for a bit), you'll hear me say that most people confuse trading and investing.  In short, investing is about a rate of return produced by the investment itself... an internal rate of return if you will.  Trading is about capital gains... the return from buying at 1 price and selling at a higher price. 

The single best place to invest your money is in yourself. The rate of return from investing in your own knowledge and skills will be much higher than anything you’ll see from ANY other investment. Stocks, bonds, real estate, cryptocurrency… you name it… investing in yourself delivers the highest ROI available.

In many cases you can measure the rate of return. In fact, in the case of books you can almost always determine the rate of return if, for example, you tend to read non fiction/educational books.

Let’s say you buy a 200 page trading book. Combine the cost of the book (including shipping and handling) with the cost of your average hourly rate multiplied by the time it took you to read it.

Like so -- $30 + ($100/hour*2 hours) = $230 invested.

Many books will be lousy. Yes, even many trading books will be terrible. But every once in a while, you’ll read a good book that teaches you something and delivers a huge rate of return. Huge as in 10x the cost in a matter of months.

So the equation looks a bit more like this…

$230/invested per book * 5 books = $1150.

If just 1 of the books delivers the 10x return I mentioned earlier, you’re net positive [$2300 - $1150 = $1150] for the whole exercise. And that’s just the immediate return. Knowledge gained lasts for a long time and, in the case of trading, compounds very well.

Oftentimes it isn’t a breakthrough idea necessarily, but rather continuous exposure to the same or similar ideas presented in different ways that produces a steady return over time.

And the results can go far beyond monetary. If investing in your own knowledge finally gives you the idea you need to quit abusing alcohol, you can measure the lifetime financial savings in the cost of booze, but what is the increased level of health worth to you?

What is the idea that allows you to meet and connect with your future spouse worth?

What is shedding 50 pounds of fat and knowing you can keep it off for the rest of your life worth?

What is building a side hustle that gives you financial security worth?

Here’s a trick I learned many years ago… Invest 5% of your gross income on your own personal development. I don’t know where the 5% figure came from exactly, but that seems about right to me. So if you earn $10,000 per month, you’d invest just $500 per month on your own personal development.

At that rate, you could buy about 15 business or self-help books at the $30 price mentioned above… more if your books cost less. True, that’s a lot to read in a month, but you get the idea.

You could also attend a seminar each month or join an educational group that has a subscription fee. Many one-day personal development seminars are $300-$500, with 3-day or longer ones typically in the $1,000 - $3,000 range (although they can go much higher, as in well over $10,000).

I think it’s best to mix and match different types of learning. For example, you could buy an audio program, a few books, and attend a 1 day seminar next month.

You don’t have to spend that exact percentage every month. It’s fine to underspend one month and overspend another. But aim for about 5% for the year on average. If that amount makes you uncomfortable, start with a lower amount and build up gradually.

You can use this budget to invest in improving yourself any way you like. That includes not only knowledge, but also equipment and services — anything that helps you grow and improve. For example, I’ve used this kind of budget to build my home office, a home gym and the blog you’re likely reading this post on among other things.

This is a pretty easy habit to develop too. Just write in your calendar on the 1st of each month: “Invest 5% in myself.” I still have it pop up in my electronic calendar every month. Then when that date comes up, figure out how much money you made the previous month, and then decide how you’ll spend it. If you can, spend it right away — easy when you order online. Remember that this is an investment; the money you spend here will be repaid in the long run based on how you invest it.

Admittedly, I’ve reduced the percentage as my income has grown… 5% of $10,000 is a lot different from 5% of $100,000😉. But I still put the money away in a “me” investment fund so I have the ability to ramp up investment in the event I need a bigger pop.

1 other thing… you can decide whether you want to invest a percentage of your gross or your net income. The gross number, obviously gives a higher budget, but use whatever figure makes you most comfortable.

I hope this helps you build your own personal investment war chest.