Invest in my education or in some other investment?

June 3, 2012 11:22 AM

Windfall of $50k! Invest in myself and get a biz degree or save it all for a rainy day?

I recently had a windfall of about fifty thousand dollars that I can put away as I have enough to live on from my regular income.

I know there have been other, similar, posts but mine is filed under education because that appeals strongly to me. I have always liked the idea that the best investment is in yourself. Also, I very much think education at this point as an investment that I want to see a return on.

Having said that, would it be wiser to simply put it away as a rainy day / retirement fund? After all, spending it on a degree is not a sure thing and therefore is somewhat of a risky investment.

I am in my early thirties and have a BA in philosophy. I live in NYC and my initial thought would be to go to Baruch college for business studies.

posted by seatofmypants to education (18 answers total)

I tend to favor socking it away because that will turn in a lot more money over time, or spending it on a handful of smaller investments in yourself to get some Pareto action on the money. However, were you dying to get a business degree before the windfall but couldn't only because you didn't have the cash? If so, then go for it.
posted by michaelh at 11:39 AM on June 3, 2012 [1 favorite]

If you want a high-paying job, don't get a business degree. Get a technical degree in chemical engineering, computer science, or whatever high-paying industry you want to work in.
posted by sninctown at 11:40 AM on June 3, 2012 [6 favorites]

There is way too little info to make a call. How much do you have saved now? What is your current job? Are you happy with it? Why do you want to study business?

I guess a degree from a good business school could generate more than $50k income over time. (Note: I know nothing about business school.) But only if you truly want to be a businessperson and you will work hard to parlay your degree into a high-paying career.
posted by scose at 11:47 AM on June 3, 2012

What do you actually want to do for a living? A business degree from Baruch may teach you interesting things, but if the goal is to increase your future earning potential, you need to find out how many of their graduates are actually employed and get a detailed breakdown of their salaries. Never pay money to a school that won't give you that information. And you should probably do some informational interviews with employers you'd like to work for to find out what educational credentials they look for and how they view your prospective program. Education can be a good investment, but never pay money for a degree to improve your employment prospects without doing a lot of legwork to find out whether the degree you're considering will actually help you reach that goal.
posted by decathecting at 11:48 AM on June 3, 2012

Business school is not a rewarding academic experience, so do not expect that.

What's your plan to monetize your degree? What do you do now? What do you want to do? How will business school help you get there? Professional/graduate school isn't an investment like the stock market -- it can only be an active investment, and it won't pay off unless you have a plan to use that investment.

Your post suggests that you haven't really thought this through. It might or might not be a good idea, but it's certainly not a good idea if you haven't given this any concrete thought beyond cliches like "education is an investment" and "a business degree will help me get a [nonspecific, unidentified, untargeted] job."
posted by J. Wilson at 11:54 AM on June 3, 2012 [1 favorite]

Please read up on the glut of people with MBAs, and do the math on whether this is actually a good investment. It's become the default "oh shit, the economy is lousy, and I'm not ready to enter the workforce" thing to do for hundreds of thousands of twenty-somethings.
posted by waldo at 12:09 PM on June 3, 2012 [5 favorites]

2 years of community college, transfer to university to get a degree in technical stuff. Then do an MBA. Enough to get you a great start at much lower cost than 4 full years in bachelors in a university. Get great GMAT scores and most likely you can ask for a scholarship!
posted by pakora1 at 1:06 PM on June 3, 2012

You are correct in your thinking: I very much think education at this point as an investment that I want to see a return on. For most people, a career will be the most valuable asset they possess over the course of their working life and a degree is a way to expand your earning power. However, a degree alone isn't enough to get you there. You need to consider the work you are currently doing (X), the future work you would like to be doing (Y) and how business studies will help you get from X to Y.

I don't know anything about Baruch College. Would this be a degree or just general studies? You may be better off finding an evening MBA program at NYU or Columbia where you would presumably be exposed to people working in your desired future career and you wouldn't have to forgo your current income.
posted by Andy's Gross Wart at 1:11 PM on June 3, 2012

Short answer: do not go to school because you have 50k. Save it, but keep it handy in case you have a purpose for it (school, house downpayment, etc). Retirement is a possible use for savings, but not the only use, so you might use it to supplement your retirements savings.

Longer answer: You shouldn't go to school - any school - because you have $50k. You go to school because it fills some need, such as career advancement or self-fulfillment (and the latter is a questionable reason), and it just so happens that you personally have $50k. Last year I worked with a guy who got an MBA just because he had the opportunity, but he did not have a goal or a plan. I do not have an MBA. We did the same job, but I got paid twice as much as he. I'm not saying that his getting an MBA was a waste, but he had someone else pay for it. If he had paid $50k for the MBA, I would say it was a huge waste because he didn't have a plan to use the MBA to his advantage and ended up doing a job where the MBA didn't really help him.

There's no reason why you have to spend this now, or commit it to anything now. Sock it away in a savings account for the time being so it's safe. Then look at your goals. If you want to "invest in yourself," figure out what kind of investment you want to make and what the goal is - whether it's getting a better job or learning something new. Then you can get that training/schooling, possibly using some of that money in the process. Or maybe your goal is to have a huge sum in a retirement account. Then you can move some of that money into a retirement account. Or maybe your goal is to buy a house. Then you have a partial or full downpayment. Or maybe you don't have any goals right now that need more money - then you can put it into a longer-term savings vehicle (e.g., a CD) and access it in the future when you do need the money.

The key is: this lump sum of money is not any different from any other money. It's the same as if you had saved $50k of your salary last year. You don't need to do anything special with it, just allocate it towards your goals the same way you allocate your current income. All it has done is increased your flexibility in reaching your goals.
posted by Tehhund at 1:15 PM on June 3, 2012 [1 favorite]

The best business education is to start or invest in a business. You could start with a $10k Angel investment, and spend your time working with the business.

Otherwise, business education is not quite the reboot it once was. Lots of people do well out of it, some people change everything completely and find themselves on a rocketship to the stars. But more end up doing the same thing they were doing before for slightly more money.

Not to say it's not interesting. It's fascinating and will completely develop you in a new way. You'll make new networks and contacts; you'll have a great time doing it.

It will cost you your windfall and then some -- dont forget the opportunity cost of being out of the workforce for a year or two. And it's bloody hard work if you want to make any kind of a leap.

If you really want to do a business degree, take loans to do it. Stack away your cash. That is one of the first things you'll learn in business school. Debt is a neutral quantity. In your case, you did not do a degree before because you did not have the option. Now you have the option. Are you doing it for the right reasons? Spending $50k won't tell you. You didn't have it before and you can live without it again.

Signing your name to a Serious Education Loan is a bit different. That will tell you if you really want the degree or not.
posted by nickrussell at 2:28 PM on June 3, 2012

Also, I very much think education at this point as an investment that I want to see a return on.

Then for the love of god, don't get a business degree. A business degree is like the the BA you already have - except depending on institution you could very well earn less as a result, that is the case at my alma mater; a presitigous university where BA grads in my year earned 15-20k more after five years than commerce grads.

If you want a return you need a qualification that is:
a) in demand
b) with great prospects for graduates
c) relatively exclusive

Those degrees are technical and/or vocational; not generalist.
posted by smoke at 2:58 PM on June 3, 2012

I think you're thinking about this backwards. What job do you really want? Take a few successful people from that field out to lunch and ask them what education will make you the more hire-able in it, and any other info they can give you about how to get into that line of work.

It's possible, for example, that your $50k will be better spent by you living off it while you serve as a grossly underpaid intern for a year or who knows what.
posted by small_ruminant at 6:25 PM on June 3, 2012

First thing: Sock the money away. Put it in a bank account or a CD. It may not get the most in interest, but it'll always be there until you tap into it, if you put it in an FDIC/NCUA backed account. Resist the urge to invest with it, with the great exception of maxing out your ROTH IRA contribution every year.

Now that the money is socked away, you have the time and energy to devote to really researching your school opportunities. Like, do you *really* want an MBA, and if you do, do you *really* want to go to Baruch? Investigate your options, and listen to your gut and heart - for the longest time, I thought I wanted to go to Seminary and become a member of the clergy. What I'm actually studying, now that I've returned to school? Math, in the hopes of getting into a decent Computer Science program. And I'm quite happy with this path, much happier than if I went with my original goal.
posted by spinifex23 at 7:06 PM on June 3, 2012

Regarding business school: When I was seriously looking into business school in 2005, I took the GMATs and got a number of offers for full scholarships at upper midrange schools. Top schools are much more expensive, but you may be able to have your cake and eat it too by investing your money and studying hard on your GMATs.
posted by b1tr0t at 7:08 PM on June 3, 2012

Don't pay for a business degree - go find a job at a company that will pay for it. Put that money into investments.
posted by triggerfinger at 9:47 PM on June 3, 2012

Have you paid off all existing debt? School loans, credit cards, mortgage? I'd probably do that first.
posted by scottatdrake at 10:13 AM on June 4, 2012 [1 favorite]

Spend some of it yourself, no more than ten per cent, so that you have the feeling of having enjoyed the windfall. If you don't, you will feel the money you have put away is mocking you.
posted by devious truculent and unreliable at 4:37 AM on June 6, 2012

thank you all for the input.

just to follow up, i never did go for the MBA or any degree. the money is still collecting dust! but, i do not regret the decision.

it will go to good use as a down payment or something similar.

to the person who asked about debt, i am debt-free.
posted by seatofmypants at 11:40 AM on April 21