The ETR Question of the Week that I’m asking myself and the ETR staff this week, is: “What’s the best investment you ever made?”
Hmm. What was my best investment? Was it the money I put into my friend EP’s development project in Boca Raton? I’ll be getting a 50% per year ROI for at least three years — on a very substantial investment. Ah, yes . . . thanks to my very good friend, EP.
Was it the $15,000 I invested in RSL’s product — a product that he sold a few years later for $100,00?
No. Hardly. The guy who really made out on that was the one who bought it for $400,000. It’s been pumping out multimillion-dollar profits every year since.
Was it this remodeled warehouse I’m working from right now? PR and I paid $400,000 for the building and another $75,000 for an adjacent parking lot six years ago. Today, it’s worth at least $2.2 million.
Was it my home in Florida? My house in Nicaragua? Was it this business? That business? What was it? And can I do it again?
Here’s what my best investment was — without a doubt. It was the time and money I put into about a dozen human beings.
I’m not being cute here. I’m not trying to flatter anyone. But if I were to calculate the actual money in (including my valuable time) and money out, over the long run, there is no question. I’ve made my biggest money by investing in people.
I could give you a list, but I don’t want to embarrass these people. Suffice it to say that I can cite the following six examples off the top of my head:
* Simon: $15,000 in . . . about $2.8 million out
* Carmen, Bert, and Paul: $25,000 in . . . about $1.2 million out (so far)
* Stanley: $120,000 in . . . about $1.9 million out (and counting)
* Sheryl: $180,000 in . . . about $3.9 million out (still going)
* Patricia: $85,000 in . . . about $890,000 out (and about to soar)
* Gene: $75,000 in . . . about $400,000 out (and more to come)
And these returns are just my share of the action. The actual numbers are, in some cases, eight to 10 times larger.
The great thing about investing in great people is that the return compounds geometrically. I mean that literally. Because great people, well taught and motivated, hire and train and motivate other good people. And that enlarges a business in a geometric fashion.
Great people will not only make you rich, they will make you happy. They will make you happy by simplifying your life. After some early years of spending a lot of time on them, they will become independent. Yet, because they appreciate what you did for them (assuming you did, indeed, do something substantial for them), they are happy to help you out forever in the future.
Let me put this another way: I am completely sure that more than 70% or 80% of the wealth I have acquired was created not directly by me but by people I believed in and mentored. Put differently: If I had spent my career trying only to make myself rich, I’d be a much poorer person today. And, yes, poorer in every sense of the word.
It’s interesting to think of wealth this way. When I look at my balance sheet, I count up bonds and stocks and real estate and the projected value of certain businesses. But I rarely count the goodwill and future windfalls I’ll be enjoying from all the great people I’ve invested in. I can’t even imagine how valuable that is going to be for me in the future.[Ed. Note. Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]