Why Investing is the Skill of the Future

Written by 
Polina Medianina
/
August 21, 2021

Answer: Samsung

Hover your cursor over the buildings and look at the connections between the companies
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future skills world skills investing start photo

Have you already started developing the skills of the future? Programming, active learning and social influence are in a list of future job skills defined by the World Economic Forum in 2020.

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They will make you more prepared for the future labour market. They can help you make more money but there is one missing skill. The skill of saving that money and actually managing it.

As Kiyosaki said: Rich person is not one with a big salary, but one who has more assets.

Thus we need to learn how to create them.

Top 10 skills future photo

Have a look at typical wealth distribution during a person’s lifetime:

wealth distribution photo

All of us are focused on maturity and active working period—the best time of our lives. We are setting high career goals, plan luxury travels, looking for a prosperous future. However, such poor planning would be relevant in the beginning of the 20th century. Because those born in 1910 the expectancy was to live to 49 years of age. Most of the people at that time didn’t even think of any pension or retirement. They simply didn’t live that long. 

According to statistics, over the past 160 years, life expectancy (from birth) in the United States has risen from 39.4 years in 1860, to 78.9 years in 2020.

average life expectancy photo

Life expectancy is increasing, biotechnologies prolong lives, but can you always work as effectively as now? Or do you even WANT to work later in life?

🌚 Why care? The government offers retirement plans.

It will hardly cover your usual expenditures. There is also no guarantee that your pension fund won’t go bankrupt. Have a look at these headlines from news

  • “the weak financial condition of seven US public pension plans threatens to deplete their assets by 2028”
  • and most recent “A Michigan-based pension fund is suing Credit Suisse over failures related to the recent collapses of supply chain funds Greensill and family office Archegos”.

The official system is just too fragile and inefficient. Therefore, the situation calls to take responsibility for your own money and start managing it without intermediaries.

🌚 It’s difficult, I don't have any special education.

Investing has become easier and accessible so that more than a half of Americans (55% to be precise) own stocks.

And the number of retail investors is growing each year worldwide, over 10 million new brokerage accounts were opened in 2020*. Because more people are taking action to make their future safer. It’s like with a phone. Once you relied on an intermediary like telephone booth or agent to call, now you can use our own smartphones.

🌚 Retirement is too far and maybe the least concerning matter for me.

That’s right, there are more acute challenges, such as replacement of our jobs with robots or algorithms or that pollution forces us to move to cleaner places, or sudden outbursts of virus makes us stay isolated, you name it.

With the world changing at such a high pace, all we need to prepare for is uncertainty. Nassim Taleb is one the most renowned writers (and former stock trader) who brings in these matters. In his book “Antifragile” he talks about surviving in such turbulent conditions. The best quality a person can have now is antifragility.

Antifragility means that something does not merely withstand a shock but actually improves because of it.

You can be very skillful and adaptive and thrive in times of crises but... it still takes time to find a job, move to a new place, learn a new skill. Transition periods require money to get through. Hence, saving appears not just a good habit to have, but a vital thing to do for your antifragility. Those who have savings feel more confident, can be more adaptive to uncertainty and thus, are happier.

🌚 I have a savings account in a bank. Does it count?

It counts if you are satisfied with your yield. Because there is one thing we tend to forget—inflation. When you start saving, your money loses value over a period of time because everything rises in prices—that’s inflation. One of the ways to understand inflation is with the Consumer Price Index (CPI). CPI is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. The historical data for CPI is shown on the chart below.

Consumer price index inflation photo

It means that with $1000 now you can buy ~1,7 times less than in 1996.
Bank deposits offer near-zero rates which don’t help save your money.

🌚 Alright, what other options do I have?

You need something that would beat the inflation and set the stream of passive income. Here’s what Americans choose:

popular investment assets photo

Real estate seems to be the most popular asset.

However, if we compare the yield of real estate with the stock market (the second most popular choice) we notice that it’s not much higher. The chart below shows the rise of the real estate index and S&P 500 (an index that tracks the stock performance of 500 major American companies).

S&P500 vs real estate photo

🌚 Both of them beat inflation and look better than deposits, should I start investing in them now? 

Not yet. When choosing between these options, consider the amount of money you need to start and the effort it takes.

investment in real estate photo

It’s clear that allocating money in different assets is a must for an investor. But for an easy start and faster capital gains the stock market is the way to go. Although investing in the stock market has this vibe of complexity or eliteness, in essence it’s just buying shares of companies. You can cash it out any moment by selling them.

🌚 What’s the strategy with stocks?

A simple and conservative way is to invest in the whole market through the S&P 500 index. The more difficult and rewarding way is to pick individual companies. For example, Apple has risen 100% in the last year, and 4.7 times in 5 years.

apple stock growth photo
$1000 in Apple Stocks


So if you had invested $5,000 last year, you would have had $10,000 now. Or if you had invested in it 5 years ago you would have multiplied your savings 4.7 times.

🌚 Is it safe?

It is as safe as the company you invest in, meaning that you can only lose your money if the company you invest in declares itself bankrupt. What is the probability of Apple going bankrupt? Or General Motors? Or Bank of America? And you can become one of the owners of those companies.

The stocks of 500 biggest American companies have been growing at an average rate of 12,5% in the past 30 years. 

As the chart below shows, the cost of shares of the broad market rose 6 times in 25 years. It means that if you had invested $5,000 in 1996, you would have had $30,000 by now.

S&P500 index growth photo

The index grows because companies in it grow in terms of money and number of customers.

Simple logic: you buy a new iPhone every year  -> the Apple revenue grows -> their stock grows -> your capital grows because you are a holder of their stock. And you buy a new iPhone next year with the profit you made.

investment cycle beginners photo

Based on all these insights, millennials are actively joining the movement called F.I.R.E., which stands for Financial Independence Retire Early. It’s a movement of people devoted to a program of extreme savings and investment that aims to allow them to retire far earlier than traditional budgets and retirement plans would permit.


🌚 It’s just hype until a massive market crash. 

The whole investing thing is not just trendy but inevitable due to the rise of financial awareness and technological development that supports it. 

The stock market is actually more than 100 years old and reasonable investors have survived through many crises that happened since the 2000s and before. 

What has changed is that 20 years ago investing was difficult because there were no convenient platforms, little access to information, you had to call your broker and consult at each step. Therefore, fraud was more common. 

-> Now individual investors have all the power and tools for individual safe investments. 

It might be just tricky to navigate through all the information. 

If you want to:

  • avoid drowning in the ocean of the financial world,
  • have a quick start to become antifragile,
  • sail towards your financial freedom,
  • subscribe to a free fast-track course on investing.

By the end of the course, you will get results that none of the free courses even promised. You will be able to create your own investment portfolio. Free of charge.

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because I want to check what my friend has just sent me
The company developed and maintains technological products and services, namely Snapchat, Spectacles, and Bitmoji. Snapchat is the third most popular app among millennials and gets high profits from ads on the platform. Since TikTok is not available to invest in yet, Facebook is boring, we see Snap as a good choice to diversify your portfolio. We don’t know what keeps those kids so glued to screens in Snapchat but if companies profit from it, we can get a share thanks to investing in their stocks.
because xBox brings us together with friends
Microsoft is the second biggest company on the market in terms of capitalization. Xbox, Skype, Windows Office 365 are all part of Microsoft business as well as it develops, licenses, and supports a wide range of software products and services, as well as designs and sells hardware. The company’s future is as bright as it’s past with all the money the company invests in disruptive tools like AI. Next time you plan to buy another game for the Xbox console, you might also consider buying a Microsoft stock which is not very expensive.
because we want schools to be cooler
So we packed peanut butter and jelly sandwiches for the kids, now it’s time to go to school. The K12 Inc. is an educational technology company. The company offers a private education program, software and education services built to teach online for preschool students up to grade 12 or K-12. The company’s earnings soared up after the pandemic because we came to realise that online learning is not far in the future and may continue the trend.
because we like to treat our pets and ourselves, too
The American manufacturer of supermarket food JM Smucker Co also operates a pet food business including brands such as Milk-Bone and Meow Mix. It’s also the producer of the peanut butter JIF, kid’s all-time favorite filling. The company offers a 2.96% dividend yield and in the third quarter reported a 7% increase in net sales.
because we love playing games
If there is one game to teach you financial literacy - it’s Monopoly, which belongs to Hasbro, as well as unparalleled portfolio of approximately 1,500 brands including MAGIC: THE GATHERING, NERF, MY LITTLE PONY, TRANSFORMERS, PLAY-DOH, BABY ALIVE, DUNGEONS & DRAGONS, POWER RANGERS, PEPPA PIG and PJ MASKS, as well as premier partner brands. The company generates strong cash flows and pays regular dividends. The company’s business moves along the online trend and develops digital content in the form of TV shows, films, computer games.
because everyone has a favorite childhood hero
Disney is a widely diversified company which owns everything from toys to apparel, and books to video games: Disney Parks, ESPN channel, Pixar, Hulu and so much more. And now it bets on streaming services with Disney+ and threatens Netflix’s market share. The company revenue suffered a major drop last year due to closure of Disneylands, but has opened them in October and foresees a strong comeback.
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