In the 2008 annual meeting of Berkshire Hathaway, a shareholder asked Warren Buffett his advice for youngsters on how they can live happy and sound financial lives.

 

To this, Buffett shared what he said to high school students –

Just imagine that you are 16 and I was going to give you a car of your choice today – any car that you wanted to pick. But there was one catch attached to it. It was the only car that you were ever going to get for the rest of your life – so you had to make it last.

So if you were to pick out the fanciest one – the Maserati or whatever it might be – how would you treat it?

Well, of course, you would read the owner’s manual about five times before you turn the key in the ignition, you’d keep it garaged – if there was a speck of rust, you’d get it taken care of immediately – and you’d change the oil twice as often as you were supposed to, because you knew it had to last a lifetime.

You get one body and one mind – and they are going to have to last you a lifetime, so you better treat them the same way. And you better start treating them that way right now, because it won’t do you any good if you start worrying about them when you are 50 or 60 – and that little speck of rust has turned into something big.

So anything you do to invest in your minds and bodies – particularly, their minds; I didn’t work too hard on my body – pays off in an extraordinary way. Your best asset is your own self. And you can become, to an enormous degree, the person you want to be.

YOU are Your Most Important Investment
Appearing in an interview in July 2009 to talk about the online animated series called the Secret Millionaire’s Club in which he teaches kids about finance and investing, Buffett was asked, “What’s your hope that kids will take away from these episodes?”

He replied (emphasis is mine) –

…One way or another you develop financial habits when you’re very young. And the habits you develop live with you for the rest of your life. So if we can get through to some young people that it’s better to be a little bit ahead of the game than behind the game, watch out for credit cards. The most important message is that the best investment you can make is in yourself. Teaching them if something’s too good to be true, it probably is, and so on. If they learn those things the easy way through these stories early on, it may save them learning it the hard way later on.

Generally speaking, investing in yourself is the best thing you can do. Anything that improves your own talents; nobody can tax it or take it away from you. They can run up huge deficits and the dollar can become worth far less. You can have all kinds of things happen. But if you’ve got talent yourself, and you’ve maximized your talent, you’ve got a tremendous asset that can return ten-fold.

How to Invest in Yourself
One of the best ways you can invest in yourself is by being a lifelong learner – a learning machine.

Charlie Munger said this in his 2007 commencement speech at USC Law School –

I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.

One reason most of us resist learning new things is the belief that we can’t learn new things. But neuroscience and psychology have shown this to be false. Our brains remain malleable well into old age, and it’s possible to create new connections among neurons and learn new things even when you are past your 70 or 80 years of age.

Now, to become a lifelong learner, you don’t need to sign up for a class or a course to actually learn something. Learning opportunities are all around you, and you just need to have a mind open to soak them in. What’s more, learning isn’t confined to what’s found in books – acquiring practical skill sets is a big part of it too.

So even if you own a library of 50 or 100 best books on investing, don’t stop there – you’ve got to apply what you read, and take action! Essentially, keep learning.

Another effective way to invest in yourself – and also super-charge your learning process – is to surround yourself with people who themselves are on a learning journey and are smarter and more talented then you.

As the motivational speaker and self help guru Jim Rohn said, “You are the average of the five people you spend the most time with.”

So, apart from surrounding yourself and learning vicariously from the greatest learning machines like Buffett and Munger, it pays to have some people in your life that can add a positive dimension to your learning process. I’ve found such people in Prof. Sanjay Bakshi, Jana Vembunarayanan, and Shane Parrish.

A third dimension of investing in yourself is by way of improving your communication skills.

Communication skills are extremely important. And not just in how to be a great speaker, but also a great listener. Buffett says –

The ability to communicate both orally and in writing is of enormous importance – and it’s under-taught. Most graduate business schools wouldn’t find an instructor to do it because it would sort of be deemed beneath them to do something so supposedly simple. But if you can communicate well, you have an enormous advantage.

Your Habits Live with You
My friend and partner in writing the Value Investing Almanack, Anshul Khare wrote about the importance of good habits in the February 2015 issue of the newsletter.

He quoted Aristotle thus – “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

Buffett has also repeatedly laid importance on building the right habits to achieve long term success. As he replied to a shareholder in one of his meetings –

When I give classes at universities, I ask students to imagine that they were going to own 10% of one of their classmates for the rest of their lives. So which one would they pick? They wouldn’t pick the one with the highest IQ necessarily, or the one with the highest grades – they’d pick the person that’s going to be effective. And the reason people are effective is because other people want to work with them and be around them – and other people, they don’t want to be around.

And those good qualities can be picked up – being generous, being humorous, being on time, not claiming credit for more than you do, but rather for less than you do, helping out other people – all kinds of human qualities that turn other people on. And then there are habits that turn other people off. Those bad habits can also be picked up when you are the age of these students. And the habits that they pick up then will follow them throughout life – so they might as well be good ones.

We are all creatures of habits. As the French gastronome (a lover of good food) Jean Anthelme Brillat-Savarin said, “Tell me what you eat, and I shall tell what you are.” But habits build over time. And the benefits of good habits compound over a period of time. But for this compounding to take place, the idea of working on the habit daily is what is required.

Healthy Mind Resides in a Healthy Body
From investing in your mind, let me now talk about investing in your body. Dalai Lama said –

Man surprised me most about humanity. Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.

Karl Pillemer, a professor of human development in the College of Human Ecology at Cornell University, runs the Legacy Project that he began in 2004, when he started collecting the practical advice for living of America’s elders. Using a number of different methods, he has systematically gathered nearly 1,500 responses to the question – “What are the most important lessons you have learned over the course of your life?”

Here is how one of his respondents answered this question with respect to health – It’s not dying you should worry about — it’s chronic disease.

This insight — that we should motivate ourselves to healthy behaviour based on the threat of chronic illness, and not of dying — can be a powerful motivator for behaviour change. Here’s why.

When people engage in a bad health habit, they try to justify it by talking about dying. So, if you talk to those who are obese, or smokers, or non-exercisers, they would tell you that “No one lives forever”.

“If it just cuts 5 minutes of my life, it’s worth it to me,” a friend told me when I asked him to drop the cigarette habit a few years back. This perspective is all wrong, I believe. As older people know first-hand, the biggest penalty for bad health habits isn’t an early death. What you are likely to be in for is years of chronic disease(s).

And like I am seeing in so many families I know around me, chronic diseases have the ability to destroy even the best-laid out financial plans. Constant visits to the doctors can take away all your savings that you may be creating for your retirement and kids. Forget the money part, what purpose does life have if you lose it to bad health instead of seeing your kids grow up?

You see, what you do NOW for your health is critically important for your future. As an elderly gentleman in my society tells me often, what should really motivate you is not how long you live, but how well you are going to live.

“Your body may need to last you at least 80 years — so live that way,” he told me in one of our morning walks.

For most of us (not all), conditions like hypertension, diabetes, high cholesterol, heart disease, and lung cancer are largely, if not, totally self-inflicted. For years, most of us would ignore the weight-gain, the shortness of breath, the exhaustion, the pain and a myriad of other signs and symptoms while waiting for the mythical ‘right time’ to take care of our physical selves.

Such a stupid plan, yet so popular!

Dear friend, please pay attention to your health NOW. It matters…much-much more than your wealth. And always remember – Your body is not the problem, it’s the consequence.

It’s a Slow Game
In the book Outliers, author Malcolm Gladwell says that it takes roughly ten thousand hours of practice to achieve mastery in a field. Now, while ten thousand hours look like a lot of time, if you can work on a habit – like reading books, or learning value investing, or taking care of your health – diligently for just 2 hours daily, you’ll reach mastery in less than 14 years.

So, the nature of the game of investing in yourself – your mind and body – is slow. But the earlier you start, the more territory you can cover…and, of course, you have more time to compound the benefits.

I believe there’s no other route to enduring happiness and success in life, and in investing.

What do you say?