Career Speculation Is A Risky Path to Financial Independence

Career Speculation

We all know that when it comes to financial independence, it is better to concentrate more on investment and less on speculation.  This path to financial freedom is a good deal more straightforward and much less risky.  Few in this community would argue this fact.  On the other hand, we not only embrace but encourage rampant career speculation above career investment in our young people.  We glorify the get rich quick schemes and the over night internet millionaires.  Although easy to find success in these highly podcastable stories, the majority of out of the box business ideas fail.  Are we in the FI blogging community (who are mostly engineers, doctors, lawyers, and computer programmers) being intellectually dishonest by encouraging such risky behavior?

Is career speculation the right path?

Definitions

Not all start-ups and new businesses are career speculation.  There are many who spent years investing in education and sacrificing to bring their new idea to fruition.  These are the people with the advanced degrees, or attended extra training courses, or side hustled along their main hustle for the early years till economic viability.

Career speculation, on the other hand, is jumping into a new venture with little training or knowledge and even less of a back up plan.

The gal who does airbnb on the side while maintaining her accounting day job doesn’t count.  Even if she is able to leave her job after a few years when revenue streams build.

I’m talking about the guy who drops his W2 to start an online T-shirt company with no experience in design, no training in internet marketing, and a dream of having fun while working all day.

So why does career speculation usually fail?

Know How

If you listen to many podcasts or financial independence blogs, you are likely to come across stories of people who left the work place and within months were making money on some new hustle or another.  Although these successes definitely occur, you usually have to have the know how to know how.

The problem with rampant career speculation, like investment speculation, is it relies on luck and market inefficiencies for success.  While you might happen to have the exact right skill at the right time, most career investment unfortunately takes some type of higher education and training.

If you leap before you look too many times without a safety net, you are likely to crash.

Sacrifice

Career speculation relies heavily on luck or even short-term gaming of efficiencies that lead to profits.  Be the first on the market to produce a certain product or provide a certain service and you’re bound to make a killing.  Go viral.  Get a gazillion followers.  The idea is to capitalize quickly.  Make a surgical strike.

Investment in a career, however, takes long-term sacrifice.  Especially at the front end.  There is much less glory and many more hours of struggle.  These are the proverbial nights and weekends that get you ahead.  While much less sexy, they are often the boosts that bring a career into focus and lead to long-term achievement.

Not always fun, but effective

Safety Net

Career speculation often eschews the safety net.  There is the idea that when you are young, youth itself can be the safety net.  There is always time later to get serious.  But this could not be further from the truth.  By front loading sacrifice and career, you are compounding wages and experience to pay even greater dividends as you grow older.

If you have dreams of early retirement, those first ten years of making money are very important.  The inability to pay off debt and create cash flows at that time of life can be devastating to future financial well-being.

Final Thoughts

While I am a big fan of second generation FI and young people thinking about early retirement in their twenties and teens, I think it is a bad idea to fall prey to rampant career speculation.  Although you don’t want to spend your whole life grinding away at a desk, jumping into speculative ventures with little knowledge or training may eventually lead to poverty, not financial independence.

Invest in your career.  Speculate with side hustles.  Create a safety net so that you can leap before you look and still land on solid ground.