On the fairly safe assumption that you want more money than you currently have, there are three ways to get it:

  1. Investing
  2. Saving
  3. Earning

Which should you focus on? The answer might surprise you…


Investing is the cool kid that everyone wants to hang out with. Let’s be honest: if you’re going to have a conversation with your friends about either Investing, Saving or Earning, which is it going to be 90% of the time?

But beneath Investing’s effortlessly cool haircut and designer stubble lies a serious limitation: you can’t start with nothing and invest your way to wealth, unless you’re planning to live for hundreds of years.

Start with £100, invest it for 20 years at 5% interest, and you’ll end up with £265. Even if you’re an investment genius and can grow it at 20% annually for 20 years (basically impossible), you’ll still only have £3,833.

That’s because compound interest is great and all, but it needs something to compound in the first place. It also starts slowly: it’s only after many periods of compounding that you start seeing results worth getting excited about.

So investing alone isn’t enough: it’ll need some help…


Saving is so uncool it doesn’t even get bullied, because nobody notices it’s there most of the time.

You can’t save your way to wealth, but it can help. Say you cut your spending so you can invest £100 per month on top of the £100 you started with. At 5% interest, you’ll end up with £41,000 after 20 years – of which about 40% is interest you’ve earned rather than money you’ve contributed.

By Year 15, the monthly interest is higher than your monthly contribution. This is the point where compounding really gets its act together: the longer you leave your money invested for, the faster it grows and the higher the proportion of the gains that’s “free”.

Nevertheless, this still probably isn’t enough – so if you can’t cut your expenses to save any more on a monthly basis, we’ll need some more help…


In the analogy I just won’t let go of, Earning is the geeky girl who gets tripped up in the hallways and eats in the cafeteria alone – until she takes off her unfashionable glasses, shakes out her hair, and gets asked to prom by the star quarterback.

Earning gets overlooked because most people earn money to invest by doing something they don’t want to do – so they’ve got interested in investing as an alternative to the drudgery of work.

But if you can look past this for a second, Earning is actually worth a higher proportion of your attention than either Saving or Investing.

Earning is more worthy of attention than Saving – because if you’re earning £2,000 per month now and you want to invest twice as much, you can (in theory at least) increase your earning to £4,000 per month whereas you can’t cut your expenses to £0.

Earning is also more worthy of attention than Investing, for the same reason: with some combination of effort, persistence and ingenuity, most people can double their income. But if you dedicated the same amount of time and brainpower to doubling your rate of return from investments, you probably wouldn’t be able to.

I’m not saying you shouldn’t save or invest: just that after you’ve got the basics of each in place, you can expect to get better results if you dedicated the same unit of time to earning instead.

So, earning is logically better to focus on than investing or saving – but you’re probably still not excited about it. Don’t worry though: the point at which Earning undoes her bun and her hair streams in the wind in slow motion is when you look at how you earn.

Earning by creating assets

An asset is something you can own that has value. It might pay you a regular income (like a rental property), but it doesn’t have to (like a famous painting).

Owning an asset is great because once you’ve bought it you don’t have to do anything else (other than any upkeep), yet you continue to benefit from any income and increases in value. Buying assets is what Investing is.


What if you can do your Earning by creating assets, as well as Investing by buying them?

For example: If you’re a physical therapist specialising in shoulder pain, you might get paid £80 for a session working on someone’s shoulder. When you want another £80, you need to do another session.

But what if you took the same knowledge that allows you to help people one-on-one and packaged it into a book?

Say you did that, and the royalties started bringing in an extra £1,000 per month.

Plug that into our example from earlier: you’re now starting with £100, but investing a further £1,100 per month – without any additional saving needed. Now, after 20 years at 5%, rather than £41,000…you’ve got £448,000!

And what’s to stop you from going on to write the blockbuster follow-up “Shoulder Pain 2: Return of the Niggle” to double your monthly investment potential? Or achieve the same thing by repurposing the material as an online course or a series of YouTube videos.

Investing alone isn’t enough

I’m not saying that creating assets is easy. It’s not – not at all.

But my point is this: people often see investing as the magic solution for becoming financially free, but the reality is much more boring than that.

Unless you’ve got a lot of money to start with, or you’re prepared to wait for an extremely long time, investing alone is unlikely to be enough.

You’ll also need to earn money, then not spend all that money, then add it to your investments.

You can, of course, do that by working in a job – and there’s nothing wrong with that at all. But if that doesn’t appeal, consider thinking about earning by creating assets instead.

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2 thoughts on “Investing, Saving, Earning

  1. 💡
    Worth reading a few times – characteristically easy to read, distilled logic but so powerful.

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