We would like to introduce our friend, a teacher, fellow-homeschooler and someone who sees education as more than just learning -it’s about transformation of life itself. She has a section here and will be contributing her thoughts from time to time. Enjoy! – WL&KV
There are several things parents need to be aware of when thinking along the lines of ‘investing in education’. ‘SAVING’ money in some kind of fund is not a form of investment, it is a form of saving, and when today’s rules of money have changed, savers are losers.
An investment in something means that the amount we will reap will be many times the principle amount we invested. For instance, if we spend an average of $300 a month on books, uniform, transportation, school fees, tuition fees, school activities, etc over the course of 11 years, that would end up give and take $50,000 once you factor in inflation and the fluctuations, most likely, devaluation of currency. It takes more and more money to equal the value of something, so it’s not necessarily true that the prices of things are going up except that it now requires more and more devalued currency to purchase the same value. So, remember, you have to factor that in too when you’re ‘investing’ in your children.
I know the actual amount for most people goes higher than $300 a month. We haven’t yet calculated the real costs of lost opportunities into it.
Once you add tertiary education in – well, we know the Math. Assuming a school dropout eventually earns $5,000 nett a month as a, say, foreman or entrepreneur or some other form of skilled craftsman, how much more would a ‘schooled’ child need to make in order to say an investment paid off at X% after factoring in inflation, etc.?
Many people take for granted that a university undergrad, grad or post-grad is a form of INVESTMENT into the future. That is only true if the institutions are adding a chain of value to the ‘commodity’ i.e. the child’s innate nature/abilities. But what actually happens, funnily, is people struggling through undergrad, scraping through grad and tightening their belts to do a postgrad. Then one of two things happens : The undergrad or postgrad drops out of school – therefore, defaulting on the previous 11 years’ worth of investment which staked everything on a future whereby the ROI would beat what the average non-schooled person is making.
The second thing is to find that the market doesn’t REWARD mere time spent in an academic setting. Why do we find most lecturers and professors not rich? Most can barely pay their parents back, what more, support their other siblings to pursue the same path. The few that got by on scholarships managed that on the back of 99% of people who have to pay higher than optimum tuition fees to make funding available for those scholarships. Getting a scholarship, in simpler terms, is about cutting into a university’s profit margin. Name me ONE good university that would rather not have paying students and is giving out 100% scholarships? The reason a university/college would allow a scholar to cut into its profit margin is to sustain a sort of old-fashioned viral-marketing : When people hear someone getting a scholarship, they’d assume that is a good student and the good student chose that uni/college so it must be a good uni/college. And even if they flock there and don’t themselves get full scholarships, they and the people around them would just blame their own lack of intellectual prowess. It’s kinda like hearing someone won the jackpot so everyone flocks to the same machine to try their luck. In the end, the machine gets its fill of coins. Scholarships don’t pay for themselves : paying students pay for them.
It hardly matters to universities and colleges that students drop out – until the dropout rate is too high that it affects the university’s ability to pull in more paid students. So what are parents REALLY investing in since both schooling and tertiary education is NOT accountable for producing the ROI parents are investing in?
Would any investor pump 11-15 years of money into a company that has a track-record of not being accountable for employability and a certain % of return that would make it worth it? Would you keep money in, say…a fixed deposit if inflation is going to rise faster, or the rate at which your currency is being devalued is faster than the interest you could accumulate? The $50,000 you put in 10 years ago will no longer buy the same things. To be RICH and to have a RETURN is to have double digit returns.
We’d like to believe that what was true 50 years ago will continue to be true 50 years from NOW. (That makes a tally of 120-130 years). We’d like to believe that in general, people who are more educated earn more money. But they only earn more money not as a result of the education, but as a result of the market still being willing to bear the cost to juice them for their abilities. But markets change. I don’t have a to be an investor to tell you that MARKETS CHANGE and if you cannot detect the currents, then you’re a loser.
When people frame their future based on their past, in this case, assuming that the more time and money one ‘invests’ in their child’s education, the same thing that held 50 years ago (in the 50s) will hold true for the next 50 years (80s to 2030s). Now, ask an investor who does the same thing : Can we make money from shares BASED on their performance in the past or do we make money based on our knowledge of the current, undergoing, fundamentals of a company?
But most people do that, with investing in shares and investing in education. The first people that got in bought low and will make money regardless of when they sell because they were in the know about the developments and undergoings of the fundamentals of the company/market. So other people tail that and buy higher…and some are lucky enough to STILL sell even higher. While previously, investors were buying based on REAL KNOWLEDGE of fundamental market behaviour, now, speculators are buying whatever that the price is going UP UP UP and GAMBLING to be able to SELL HIGHER and get out rich!
If you know what happens in the stock market when stock prices go up because of increased demand rather than strong fundamentals, you will realize that is exactly what will happen to your investments in ‘education’. People today are investing in ‘tuition’ and ‘workbooks’ and doing well in school which is so 60s! Their reason is because ‘they didn’t get to buy in back then.’ Even during the time I was in school, the market no longer rewarded academic prowess. It was beginning to reward emotional and social intelligence, being able to think out of the box, being able to use technology and being able to be a self-directed learner. I owe a lot of my fulfillment in life to my ability to predict those market forces and not go into Finance or Law or Journalism. I saw the decline of the power of mass-media and took the last ride into Emerald City on the Advertising gravy-train.
I profess that I know absolutely nothing about finance, economics nor investment so you don’t have to take anything you read here seriously. This is just a blog and this is just my take.
But if I were you, I’d invest in the strength of the fundamentals of the next big market. I’m already investing in that. If you don’t know what those fundamentals are, then it’s time to worry. If your money’s already in and you cannot time the market except gamble on it, ….well, I’m just saying. Don’t listen to me.