The Illusion of Job Security
Society emphasizes securing a good job and salary, but investing can be equally—if not more—important for financial success. Many believe a stable job provides security, yet salaries can disappear overnight due to layoffs or economic downturns.
The Cost of Bad Investments
Poor investment decisions can devastate financial security. Two of my high-earning friends lost most of their life savings in the 2008 housing crash after investing in real estate at market peaks. They weren’t alone—at its worst, 18.8% of U.S. households were underwater (Forbes, 2014). Many believed a high salary would protect them, but bad investments erased their wealth.
Why the Rich Get Richer
Successful investors—Warren Buffett, hedge fund managers, and CEOs—derive most of their wealth from investments, not salaries. The top 10 hedge fund managers earn between $600M and $3.5B annually (CNN Money). Even billionaires like Bill Gates amassed wealth through stock appreciation, not wages.
The Tax Advantage of Investing
Investors benefit from lower tax rates compared to salaried employees:
- Dividend income is taxed lower than salary in both the U.S. and Canada (Wikipedia, Globe and Mail).
- Capital gains taxes are often lower than income taxes (EY, Wikipedia).
- Example: In Ontario, someone earning $50,000 in salary pays $8,694 in taxes, taking home $41,306. However, an investor earning $50,000 in capital gains pays only $2,854 in taxes, keeping $47,146—a $5,840 advantage.
This is why the wealthy pay lower taxes. Warren Buffett has openly stated that he pays a lower tax rate than his secretary because most of his income comes from capital gains and dividends.
Why Schools Ignore Investing
Despite its importance, schools dedicate zero time to teaching investing. Instead, they focus on science, literature, and other subjects while ignoring a skill that directly impacts lifetime wealth.
The Freedom of Investing
Beyond financial security, investing provides location independence. With internet access, investors can earn from anywhere in the world. As people live longer, they will depend on investments for 20-25+ years in retirement, yet many lack the knowledge to manage them effectively.
Final Thoughts
Investing isn’t just an option—it’s a necessity for financial independence. Those who master it gain higher income, lower taxes, and greater freedom, while those who rely solely on a salary face greater financial risks.
