As Published originally on Investopedia.com
Attention Millennials: Your house and your 401(k) are not your largest assets.
Despite everything you may have read or heard, your house and your 401(k) are not your largest assets—your career path and income are your biggest assets by far. Below I will illustrate why this is the case and provide one simple tip on how to maximize your personal growth potential.
Your Home Is an Expense, not an Asset
Your home’s value (at least initially) generally depends on how much home you can afford, which is tied to your income. After you purchase, it might go up by more than inflation, but I would never count on that happening (at least not in the Midwest). You also pay back principal plus interest, taxes, insurance and maintenance year after year. It is a huge expense—for most people, probably their biggest expense! Since the house is not generating income for you and is actually costing you potentially thousands per month, it is not your best investment.
Your 401(k) deferral rate, which is hopefully 15%, is also tied to your income. If you have low or slow growth earnings, it directly impacts your ability to grow wealth in your 401(k). Simple example—someone who makes $50,000 will have much more difficulty reaching the $18,000 401(k) maximum contribution compared to someone who makes $150,000. (For more from this author, see: Why a 10% Deferral to Your 401(k) May not Be Enough.)
Future Income Is Your Largest Asset
For young people, your future income is your largest asset. Initially, your income may be tied to your degree or technical expertise. However, over time, it will be tied more so to your attitude, personality and communication skills. I believe there is one easy way to improve these characteristics—read as much as possible.
“The person who does not read is no better off than the person who can’t read.” – Mark Twain
According to the New York Times, Fortune 500 CEOs read four to five books per month, and according to the Pew Research Center, 28% of Americans read zero books last year. My interpretation of this data is reading is a pretty good idea for career development and advancement. My recommendation is to download the Audible App and listen on fast forward 1.5x. My drive to work is approximately 20 minutes and if I listen on 1.5x speed, I can get 30 minutes of reading in each way, for a total of 60 minutes reading per day. That’s about one book per week on average. Looking for a great place to begin? Consider the following:
- Stephen Covey: The 7 Habits of Highly Effective People
- Dale Cargnegie: How to Win Friends and Influence People
- Benjamin Franklin: Autobiography
- Napoleon Hill: Think and Grow Rich
- Walter Isaacson: Benjamin Franklin
- Hal Elrod: The Miracle Morning
- Chip Ingram: True Spirituality: Becoming a Romans 12 Christian
- Zig Ziglar: Over the Top
I believe if you fill your mind with personal growth and development messages, your attitude, personality and communication skills will reach new heights. These learned traits will eventually overpower any other skill or knowledge you had previously acquired. Your income or career path is your largest asset and is greatly determined by how you feed your mind.
(For more from this author, see: Should You Retire With a Mortgage or Pay It off?)