Searching for Value? Invest in Yourself
The stratospheric levels of stock prices these days has made the job of finding undervalued stocks incredibly difficult. While stocks have consistently outperformed bonds, cash and real estate over the long term, there is one asset that can always beat stock performance - your job skills.
Think about it. The marketplace assigns a value on your worth every day. Those with college degrees make more than those who don't. Those with graduate degrees make more than those with only undergraduate degrees. But beyond that, there are a wide range of skill sets individuals can acquire if they choose to invest in themselves.
Let's say you're an accountant and good with numbers. You might want to become a Certified Financial Analyst or an actuary, which help you extract more income from your current employer or the marketplace as a whole.
What if you work in the shipping department of a company? You might want to take some computer courses, which will give the ability to better choose among competing shipping programs to buy and implement at your firm.
If you enjoy gardening, you can take horticulture or landscape design classes and parlay that into a part-time or freelance position.
The point is that education has a dramatic impact on income, according to virtually all studies. And you don't necessarily have to get a degree. Some courses, say on computer aided design, could be all it takes to get a bonus, or at least keep you competitive in this era of downsizing.
If your employer offers tuition reimbursement, then it's a no brainer. You aren't risking a dime and the upside is potentially enormous.
Even if your employer won't pay, you should definitely set aside some money for retraining. If you invest $1,000 in yourself, you may just get a raise of $1,000, which over several years is a great payoff. Investing the same $1,000 in stocks, by contrast, will only yield about $100, or 10 percent, a year over the long haul.
Bottom line: when stock prices become overvalued, it's time to look for and invest in undervalued assets-your job skills.
Back to Financial Planning