If you had $20,000 to invest where would you put it? The bank? Stocks? Bonds? Maybe even gold? James Altucher, managing director of Formula Capital, says that even though he thinks stocks are going up, there are better ways to invest your money.
Altucher says investors, especially younger ones, would do better to invest their money in themselves.
His reasoning: You could put, say $20,000, into stocks and if you are as lucky as Warren Buffett, you'll make $2,000 to $4,000 or so in the next year. (Buffett has been averaging 10% to 20% returns in recent years.) Not life changing. On the other hand, if you can come up with ways to invest that money in starting your own business, for example, you have a much better chance of generating returns of 100% or more.
Altucher knows what he is talking about. He did this himself, starting sites such as smokelove.com and smartorstupid.com years ago. They were both failures but eventually he developed Stockpickr.com, an online community of investors, which grew to one million unique visitors per month. Altucher cashed in when the site was bought by TheStreet.com in 2007. His total investment for the three sites: around $10,000. While Altucher won't say how much he generated from the sale of Stockpickr.com to TheStreet.com, it was undoubtedly at least a multiple of ten times his initial investment.
His point is clear: While the stock market should offer decent returns over the next few years, an investment of $20,000 to even $100,000 won't give you the kind of payoff that you could get from making an investment in your future.