If You Have An Extra $100 — Invest It In Education, Not The Stock Market – OpEd

Advice from a hedge fund partner.

Today there are hundreds of articles about investing in stocks, bonds, and other assets to maximize your returns. But I strongly believe that instead of trying to invest $100 or $1,000 in the stock market, it is better to put money into your own development.

Focus on education

Once a person has met their basic needs for food, shelter, and medicine, they should strategically plan their career growth and focus on education to achieve this goal. This applies to corporate managers and entrepreneurs alike. Unless you’re making tens of thousands of dollars a month, it’s better to think not about investing in stocks, but instead consider investments that foster personal growth, like foreign language or programming courses.

If I was at the beginning of my career right now, I would prioritize obtaining a top education at Ivy League universities, Cambridge, Oxford, or  LSE. Even if I didn’t get in the first time, I would apply again next year. In today’s global world, education is the most effective social ladder for those with intelligence, desire, and motivation, yet lacking substantial financial resources.

If I were an exceptional young entrepreneur with a groundbreaking idea and a clear execution plan, I’d likely dive right into business. However, such individuals are rare, often falling into categories of either con artists like Elizabeth Holmes or geniuses like Bill Gates and Steve Jobs. Even these visionaries attended renowned universities where they cultivated ideas that propelled them to success. Thus, education serves as a gateway to the world, benefiting both average individuals and exceptional minds.

Combine financial investments with personal development

Upon exiting my government role, I had to decide how to invest several million dollars I had accumulated during my work in business. I could have revived a struggling pharmaceutical firm or bought three apartments while continuing in public service or corporate management. I chose business, where I saw the most potential for self-fulfillment. I infused the company with not just my money, but also my intellectual and professional expertise.

I returned 20x my investment, not including dividends. I would not have made such a profit if I had bought apartments. On the other hand, I would not have benefited the company or realized my potential without education. Anyone with money can buy a property, but not everyone can successfully transition from bankruptcy to a prosperous pharmaceutical business, even at one state level. This task required my knowledge.

The point of this story is that you have to look at investments from different angles, combining personal growth with income. The best advice is to do what you like and are good at. If it’s something you love, and you skillfully invest in it, you’re much more likely to become a well-to-do, fulfilled person.

Start investing in the stock market when you have established yourself

I suggest starting to invest once you’re settled in life and clear about your future. Your income should cover basic needs and still provide significant funds for your investment goals. For example, investing would be appropriate for someone with a stable corporate career and a clear vision of further growth. Or, someone with a stable income-generating property, like a hotel.

Where to invest depends on your knowledge. For a high-earning surgeon, I’d suggest investing in medical equipment and robotics. This is the cutting edge of what he knows as a specialist.

For someone lacking specialized expertise, like a bank manager with a sizable inheritance, I recommend diversified, risk-reducing strategies. Consider index funds, gold, alternative investment funds, real estate, and potentially the S&P 500 ETF, which historically grows about 9-10% annually over 15-30 years. Yet remember, in our rapidly evolving world, past strategies may not assure future success.

Follow global trends

To outperform an average ETF growth, cultivate interest in the topic, explore options like alternative investment funds, and understand how these strategies function during a crisis. It is essential to look at global trends to separate the wheat from the chaff, and hype from actual technological development.

An example from my industry: an aging population and longer life expectancy is a global trend. Healthcare already accounts for one-fifth of the U.S. stock market. Unlike the tech industry, it’s more stable and predictable because there are patents of 15-20 years, and sometimes 30-40 years amid patent jungles. Market consolidation is strong — to build a portfolio, it’s enough for funds to study 25 companies in depth. Medical service demand is inelastic — crisis or war, a diabetic still needs insulin. Finally, all the clinical trial results that affect this industry are in the public domain.

The sector is lucrative and grows faster than the global economy, but its complexity calls for professional analysis. Insider information and numerous studies can overwhelm non-professionals. Still, healthcare enthusiasts can invest in related indices for long-term returns exceeding the S&P 500.

Don’t be afraid to be entrepreneurial

One last piece of advice — I’d suggest those inclined to autonomy and decision-making pursue entrepreneurship over management, surrounding themselves with a similar circle. We lack creators.

I believe the next global crisis will stem from inefficient corporations, including public ones, with countless investors but no people with a controlling interest. Their managers prioritize short-term gains and bonuses. At the same time, the profitability of corporations is declining. For example, ten major technology companies lost $4.6 trillion in market value last year. Major investment funds such as Blackrock also lost trillions of dollars. All this shows the unsustainability of their strategies during a crisis.

Given this, it’s vital to have many entrepreneurs who can generate new ideas, identify human needs, and propose solutions. These people create progress and provide economic and technological dominance for countries. There are less than 600 million entrepreneurs worldwide, a mere 7% of the global population. In developed countries like the U.S., with around 16% of the working population as entrepreneurs, it’s still insufficient. Their contributions, along with scientists and visionaries, extend our lifespan and will make it longer for future generations.

Dr. Dmitry Reykhart, Chairman of the Board of Directors of Ruthenium Global Pharma Fund, Doctor of Biological Science.