Early Retirement
The Best Investment You'll Ever Make
Originally published in Motley Fool
Investing in yourself first will almost certainly be
the best investment you'll ever make. Let's say
you’re earning $30,000 per year; it’s going to
take a lot of scrimping and saving to invest
even $5,000. But at $60,000 per year you
could easily invest $20,000 and still have
$40,000 left to live on. That’s FOUR TIMES
the amount you could have invested
otherwise. The stock market isn’t going
to give you those kinds of returns. But for
as long as you stay employed, whether it
be for 10 years or 20 or 30, you can count
on similarly amazing results year after year.
How many other investments can make that claim?

If you find yourself in a low-paying or dead-end job, you simply have to remedy
that situation first. You may be the hardest worker in the world, but if you’re in
a field that pays low wages, you’re going to find it tough going at best. So put
your hard work ethic to work on yourself first. Just be sure to choose a
practical career path that will bear fruit rapidly.

Biting the Bullet and Retraining

Our own story serves as a good example. My wife was in a dead-end career as
a travel agent, earning less than $15,000 per year at a job that was quickly
turning obsolete. It was 1998 and we had been saving for 7 years – nearly half
of a 15-year plan we had put together for early retirement – and yet we still
only had a nest egg saved up of about $68,000.

Robin realized she needed to invest in herself first before she could do much
to help with investing for our retirement. So for 1½ years she went back to
school again to reinvent herself and become a nurse. She passed her
prerequisites at a local community college, got accepted to a rigorous one-
year accelerated nursing program, and wasted no time getting hired as a
nurse straight out of college. She immediately put her newfound skills to the
test starting in 2000.

The one-year nursing program set us back $20,000 (plus the lost opportunity
cost of her being unemployed for 1½ years and not making the $15,000 per
year she otherwise would have made). We had to borrow $10,500 in Stafford
loans and another $5,000 from the bank to help cover the education costs.

Think of it: here we were, right in the midst of our primary investing years, and
instead of earning money, Robin was needing to spend it on re-educating
herself. But it was a necessary expense and we both knew it. She had to invest
in herself first, and we trusted that in the long run it would be the right decision
and bear fruit.

And it did. In her first year of nursing she more than doubled her previous
salary. She went from making $15,000 as a travel agent to $39,000 as a
nurse. Just six months after finishing her nursing program, we had already
managed to pay back every cent of the loans.

By the following year she was making $45,000, and the year after that $50,000
and still going up. Now she was earning a salary that could genuinely help us
with investing for early retirement.

Can you see how important it was for us to bite the bullet and pay for this
training first? Even though it meant having to spend money over the short
term, Robin earned enough in her first year of nursing to more than pay back
her student loans. One-and-a-half years of retraining set her on a reliable
earnings path for life.

Not only that, but suddenly she was eminently employable. We knew we could
live anywhere in the country (or world!) and she could find work. If we were to
retire early and discover our finances were too tight, we knew in a pinch she
could fall back on her nursing background and find temporary work to tide us
over.

This gave us a newfound sense of confidence. We ended up being able to
retire in 2006 at the age of 43, two years earlier than originally planned, in
large part because we knew both our careers offered good opportunities for
temporary employment should it ever become necessary.

Supercharging Your Investments

Once you make the switch to a better career, all things become possible. With
Robin making $50,000 per year, we could live on her salary alone and invest
all of my salary. Suddenly we could take giant strides forward. We did most of
our really good investing after Robin’s nursing career got underway – and that
wasn’t until more than halfway through our 15-year plan. At that point we were
hitting on all cylinders and were able to sock away significant amounts of
money in a relatively short period of time.

Imagine if Robin had begun her retraining at the beginning of our retirement
planning. Instead of 7 years of higher wages, we might have had 14 years of
solid earnings helping us along on our path to financial independence.

Our original retirement worksheets woefully underestimated just how much our
salaries would grow – and how much extra money we would be able to invest
as a result. We had to revise our yearly savings estimates significantly
upwards in order to account for the new reality of two jobs paying solid wages.
You may likewise find yourself pleasantly surprised on the upside. Do what you
can to supercharge your career and you’ll end up supercharging your
investments as well.
You are your own
best investment!