Conceptually, if you think of yourself as a business, your perception of the riskiness of different investments will change.

Businesses decide what projects/investments to make and assign them different hurdle rates, essentially based on risk/reward.

• Should we invest in upgrading our machinery?
• Should we buy or build?
• Which market should we invest in to open up our next location?

They task their consultants and finance nerds with making these Net Present Value (NPV) calculations.

When they no longer think that the best use of their capital is to invest in growing their business, they pay out dividends. They’ve basically stopped growing and feel a better use of their money would be to simply re-allocate it to shareholders.

As a person/business in my growth years, my view is that you should seek to invest in things that will grow the business of you.

When you feel that you can no longer efficiently grow the business of you, then you can spend money outside the business – pay out dividends. Invest in other things.

Through that lens, spending money/investing on anything outside of growing the business of you is actually quite risky.

Not talking about the riskiness of individual stocks compared with one another, but the riskiness of investing IN the business of you vs investing OUTSIDE of the business of you. That’s a far bigger and more important calculation.

Money first invested in yourself will give you much better returns.

• Lebron James spending $1.5M on his body is probably earning him another 5 years of ridiculous salary.
• Spending money learning a side hustle might make you an extra 30-40K/year.
• Engineers spending money on additional certifications might make them an extra 10K/year.
• Spending money on fancy events or memberships like Soho House might lead to a gig that pays you a much higher salary and/or introduce you to opportunities you otherwise might never have.
• Spending money on therapy sessions might lead to amazing productivity and better relationships.

In financial terms, I assign a higher hurdle rate to investing in anything outside of investing in myself.

This goes against 99% of the literature out there and what we’ve been programmed to think so I fully expect most people to disagree. And of course I could be completely wrong.

Once you’ve maxed out on all the possible ways you can invest in yourself then yes, of course invest. Invest in real estate, stocks, bonds, art etc…

But if you view investing in anything outside of yourself as being comparatively risky to investing in yourself, you may want to stick to investing in ultra safe asset classes that aren’t very volatile like US treasuries, bonds and of course, class A real estate.

As the founder of BlackRealtors, a network of black realtors dedicated to helping people buy and sell real estate, I am obviously biased.

But as mentioned in a previous article, real estate helps you grow wealth, not necessarily make it.

If you spend time investing in yourself first, there’s a good chance that there has been an improvement in your personal finances along the way.

There’s no getting around it, but that’s exactly what you’ll need to show a lender so they can give you the money you need to invest in real estate.

As Jay-Z said, you’re not a businessman you’re a business, man.

Handle the business of you, first.

Disclaimer: This is not financial advice. This is merely one person’s opinion. This person is neither a millionaire, billionaire or rich and famous so feel free to ignore me.