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Making Retirement Work Tip #5: Autodidacticism is the Most Fun You Can Have With Your Clothes On!

I’ll save you the dictionary look up.  Self-Directed Learning.

We’re (I’m) all about that here at Liberty.  That’s job #1.  Self-directed learning is the reason I’ve never worked for someone else, but still have way more in the asset column than the average person my age.

Risk is essentially variables that you cannot account for.  Unknowns.   The more you learn, the less unknowns you have, and the more returns you can safely go after.  But the more you know about a particular subject, the more accurate your predictions on it, and the less risk you take when it comes time to put your money where your mouth is.

Self-Directed Learning is the way that you can break yourself out of the cycle of crappy mutual fund returns that are at the mercy of inflation and management expense ratios.   Autodidacticism can provide you a way to dramatically reduce your tax burden in a lot of situations.  It can lead you to uncover sources of income you never thought possible.   It can lead you see things coming like the American housing crisis.   You can identify investing opportunities that have great returns but next to zero risk.

But here’s the thing.   Learning is not just reading a few articles here and there, and being able to repeat them.   The internet just like TV and every other medium out there is full of spin, hackery, sales pitches, and other forms of complete and utter bullshit.  The key is to be able to determine which parts are true, and beyond that, which parts are useful.

One of Peter Lynch’s main tennants in his terrific book “Beating the Street” was very simple.  Invest in what you know.   Pick an industry or two.  Preferably ones that have a fairly positive future outlook.  Consumer electronics?  Good.  Newspapers?  Bad.   Learn all you can about it.  Read company quarterly reports.  When you find something you don’t understand, look it up.  In short, get a nice, healthy hobby going.   If you want to kill the market’s returns, simply put in as much effort into your stock-picking as your chest-painting neighbor follows his favorite sports team.

Because here’s the thing about teaching yourself.. and probably not the way you did it in school.  It’s fun.

When you find yourself using new knowledge and skills to get ahead, you’re going to end up stopping at some point along the line, look back, and say “I did all that?  Holy crap!”   You’re going to find that you are acquiring all sorts of new techniques, knowledge, and skills that most people simply do not have, simply because they’re not pursuing the path of self-improvement as aggressively as you are.   And it can be applied to a lot more than finance. You can improve your social skills, mental toughness, temperment, physical stamina… the list is endless.   You can learn techniques to make yourself a faster learner, to acquire languages very quickly, to become more attractive to prospective friends, employers, and lovers… even to improve your performace in the sack!

And really, who doesn’t want to be the last of the red-hot lovers?

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