Learning is the best investment you can make
Why did the busiest person in the world, former U.S. president Barack Obama, read an hour a day while in office? Why has the best investor in history, Warren Buffett, invested 80% of his time in reading and thinking throughout his career? And did you know that Bill Gates reads a book a week during his career? And that has he taken a yearly two-week reading vacation throughout his entire career?
Why do the world’s smartest and busiest people find one hour a day for deliberate learning (the 5-hour rule), while others make excuses about how busy they are?
The answer is simple: Learning is the single best investment of our time that we can make. Or as Benjamin Franklin said, “An investment in knowledge pays the best interest.”
This insight is fundamental to succeeding in our knowledge economy, yet few people realise it. Luckily, once you do understand the value of knowledge, it is simple to get more of it. Just dedicate yourself to constant learning.
Knowledge is the new money
We spend our lives collecting, spending, lusting after, and worrying about money — in fact, when we say we “don’t have time” to learn something new, it is usually because we are feverishly devoting our time to earning money,
But something is happening right now that’s changing the relationship between money and knowledge. We are at the beginning of a period of what renowned futurist Peter Diamandis calls rapid demonetisation, in which technology is rendering previously expensive products or services much cheaper — or even free.
While education and health care costs have risen, innovation in these fields will likely lead to eventual demonetisation as well. Many higher educational institutions, for example, have legacy costs to support multiple layers of hierarchy and to upkeep their campuses. Newer institutions are finding ways to dramatically lower costs by offering their services exclusively online, focusing only on training for in-demand, high-paying skills, or having employers who recruit students subsidise the cost of tuition.
While goods and services are becoming demonetised, knowledge is becoming increasingly valuable.
The knowledge and skill gap
Those who work hard throughout their career but don’t take time out of their schedule to constantly learn will be the new “at-risk” group. They risk remaining stuck on the bottom rung of global competition, and they risk losing their jobs to automation, just as blue-collar workers did between 2000 and 2010 when robots replaced 85 percent of manufacturing jobs.
People at the bottom of the economic ladder are being squeezed more and compensated less, while those at the top have more opportunities and are paid more than ever before. The irony is that the problem is not a lack of jobs. Rather, it is a lack of people with the right skills and knowledge to fill the jobs.
Learning is the best investment
But, unlike money, when you use knowledge or give it away, you don’t lose it. Transferring knowledge anywhere in the world is free and instant. Its value compounds over time faster than money. It can be converted into many things, including things that money can’t buy, such as authentic relationships and high levels of subjective well-being. It helps you accomplish your goals faster and better. It’s fun to acquire. It makes your brain work better. It expands your vocabulary, making you a better communicator. It helps you think bigger and beyond your circumstances. It puts your life in perspective by essentially helping you live many lives in one life through other people’s experiences and wisdom.
Former president Obama perfectly explains why he was so committed to reading during his presidency: “At a time when events move so quickly and so much information is transmitted,” he said, reading gave him the ability to occasionally “slow down and get perspective” and “the ability to get in somebody else’s shoes.” These two things, he added, “have been invaluable to me. Whether they’ve made me a better president I can’t say. But what I can say is that they have allowed me to sort of maintain my balance during the course of eight years, because this is a place that comes at you hard and fast and doesn’t let up.”
Six essentials skills to master the knowledge economy
1. Identify valuable knowledge at the right time.
The value of knowledge isn’t static. It changes as a function of how valuable other people consider it and how rare it is. As new technologies mature and reshape industries, there is often a deficit of people with the needed skills, which creates the potential for high compensation. Because of the high compensation, more people are quickly trained, and the average compensation decreases.
2. Learn and master that knowledge quickly.
Opportunity windows are temporary in nature. Individuals must take advantage of them when they see them. This means being able to learn new skills quickly. Understanding and using mental models is one of the most universal skills that everyone should learn. It provides a strong foundation of knowledge that applies across every field. So, when you jump into a new field, you have pre-existing knowledge you can use to learn faster.
3. Communicate the value of your skills to others.
People with the same skills can command wildly different salaries and fees based on how well they are able to communicate and persuade others. This ability convinces others that the skills you have are valuable is a “multiplier skill.” Many people spend years mastering an underlying technical skill and virtually no time mastering this multiplier skill.
4. Convert knowledge into money and results.
There are many ways to transform knowledge into value in your life. A few examples include finding and getting a job that pays well, getting a raise, building a successful business, selling your knowledge as a consultant, and building your reputation by becoming a thought leader.
5. Learn how to financially invest in learning to get the highest return.
Each of us needs to find the right “portfolio” of books, online courses, and certificate/degree programmes to help us achieve our goals within our budget. To get the right portfolio, we need to apply financial terms — such as return on investment, risk management, hurdle rate, hedging, and diversification — to our thinking on knowledge investment.
6. Master the skill of learning how to learn.
Doing so exponentially increases the value of every hour we devote to learning (our learning rate). Our learning rate determines how quickly our knowledge compounds over time. Consider someone who reads and retains one book a week versus someone who takes 10 days to read a book. Over the course of a year, a 30% difference compounds to one person reading 85 more books.
Learning is a journey that never ends
To shift our focus from being overly obsessed with money to a more savvy and realistic quest for knowledge, we need to stop thinking that we only acquire knowledge from 5 to 22 years old, and that then we can get a job and mentally coast through the rest of our lives if we work hard. To survive and thrive in this new era, we must constantly learn.
Working hard is the industrial era approach to getting ahead. Learning hard is the knowledge economy equivalent.