An important concept in personal finance is the distinction between investment returns and investor returns.
The former represents the potential obtainable if an investor stuck with an investment, and the latter is the return investors actually take to the bank, typically far less than potential returns because of investors’ own erratic behavior during the period of the investment.
Perhaps more than any other area in contemporary American life, the investment in higher education, like stock investing, exposes a gaping chasm between theoretical and actual returns and as such obligates the scrutiny of serious financial advisors.
At a price tag approaching an average of $200,000 for four years of private college tuition, room and board and associated expenses, a college education is a terrible thing to waste, to paraphrase the old UNCF fundraising slogan.
I recall an encounter some years ago with a typical new grad with perhaps slightly above-average performance at a slightly above-average school.
I asked him what his favorite course was in college. He replied: “Anthropology of the Caveman.”
Other than finding the class “cool” and “really interesting,” the young man could not articulate how what he learned in the class could enhance his career prospects, contribute to his budding philosophy of life, or frankly, what he actually learned in the class which he had only recently taken. The young man has since gone on to a variety of jobs with minimal pay and minimal prospects.