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Answer by Rob Ennals, product manager at Quora, former product manager at Google:
People tend to overemphasize the returns from investing in the stock market and underemphasize the returns from investing in yourself—particularly when you are young.
To invest in yourself, you want to spend money on things that will put you in a better position to earn money in the future. This means spending money on things that will make you smarter, things that will save you time, and things that will save you stress.
In particular:
Things that will make you smarter: The secret to getting good at stuff is to put yourself in stressful situations where you will try to do hard things, fail in interesting ways, and learn. The traditional way to do this is to go to college, but other things like joining a startup or trying an ambitious project are also valuable.
Things that will save you time: All that stuff you need to do to get smarter takes time, so it’s often worth spending money on things that will give you more time. In practice this means things like living close to your work, paying a cleaner, having high-capacity appliances, and outsourcing any task that won’t make you smarter—all of which are expensive.
Things that will save you stress: Most things that will make you smarter are inherently stressful. If you are going to cope with that stress then you need to reduce the stress from other parts of your life. In practice this means things like buying products that are reliable (particularly your car) and getting them properly maintained—all of which costs money.
There are also some things to be careful of:
Be careful of investments that bring worry. If you care so much about what you have invested that you need to check the news all the time, then the penalty from stress and time may be exceeding the benefit from compounding interest. If you invest in the stock market, invest an amount you feel comfortable ignoring for a few years.
Be careful of expensive possessions that bring worry. If something you own is so expensive that you worry about whether it will get lost or damaged, then you may be significantly hindering your ability to grow. If having a fancy car or fancy clothes means you worry about damaging them, then maybe you are better off driving a Honda and wearing clothes from Target.
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