A friend and I were discussing his option of getting a Masters degree or starting a business. Conceivably he could do both, but let’s go with the assumption that they will both require 100% of his focus, so he has to pick one.
While discussing, I compared his Masters vs Entrepreneurship decision to that of house buying vs house renting. I’m a big fan of renting over buying and have even calculated the numbers on an excel doc to determine the outcome over the long run, and I’m not alone in this opinion.
For most people, however, I would probably tell them that buying is a better investment, not because it actually is, but because they are human, and 99.99% of humans won’t have the self-discipline to make renting be a better investment. The reason that is, is because buying forces you save away a huge chunk of your income every month via your house mortgage, and the pain of not paying your mortgage is so high that most people do it every month, year after year.
Renting, on the other hand, frees up a bunch of money that would otherwise be put into a mortgage. At the end of the month, you look at your healthy bank statement, and from here have two options. The smart option, and the way renting becomes a better long term investment over owning, is to take all that money and put it directly into some kind of investment. Unfortunately, most won’t have that discipline and instead will spend some of it, or all of it, and then invest the rest. Unlike with a mortgage, investing becomes the last option, instead of the first.
Now let’s come back to the Masters vs Entrepreneurship decision. Getting a Masters degree is much like owning. You are forced to put in a bunch of time to take classes, that leads to great networking, that most likely will result in you being smarter, better well connected, and ready to take on the world. Entrepreneurship is like renting, every day you have a set period of time, but no one is forcing you to do anything and thus you might sleep in an extra 30 minutes, watch a few extra hours of T.V., or go out with friends a little later than normal. That means success, through hard work and focus, is secondary to all the other options throughout the day. Getting a Masters forces you to put your personal success first, whereas Entrepreneurship leaves that decision up to you, and in that case, 99.99% will sleep in a little extra, stay out a little later, and make their personal success secondary…because there’s always tomorrow.
When deciding between buying and renting, it comes down to what you choose to do with your money. When deciding between a Masters or Entrepreneurship, it comes down to what you choose to do with your time. If you rent or start a business and are willing to put in the same amount of money/time as you would with buying or getting a Masters, then it’s the smart decision, otherwise, stick with owning and getting a Masters.