Return on Investment

How much time and money should you invest in your future?

In this lesson, we will be talking about return on investment, in order to find out if your investment in education is worth your time and money.

Return on investment include, cost time or money up-front. Yield returns or profit down the road.

A calculation of the amount of profit or loss from an investment, and an amount made minus amount invested equal return on investment.

What would you do, if I asked you for 10 dollars today, but agreed to pay you back 15 dollars next week, would you do it?

If you say yes, you made a smart investment! The return on investment is 5 dollars, or 50 percent. 

Amount made minus amount invested, equal Return on Investment. 15 minus 10 equal 5.

Percent for return on investment is equal to return on investment divided by amount invested.

But now what would you do, if I asked you to pay back sixty five thousand dollars over the next 15 years, but in exchange you would make one million dollars. Would you do it?

If you say yes to this huge investment, you really understand how to play the game. The Return on investment is $935,000, or roughly one 1500 percent. 

This is roughly how an investment in a B.A. works. The 65,000 dollars is the total loan, the 15 years is the 5 years for the Bachelor of Art. plus the 10 years to pay off the loan. The million dollars is the typical difference in wages over a lifetime of work between an high school diploma holder and a B A holder.  

Stock market investors consider a great return on investment to be 15 percent.  This is 100 times that!

Educational Investments, Input 1: Time.

The chart below shows you approximately how long it would take to complete the education level you are working toward. For example, the time length for Advanced Training is a minimum of one year but you can also stay in the program for up to two years to acquire more training with better pay. 

Next we have the apprenticeship program which required one to four years of training, depending on your chosen career.

Below the apprenticeship program, you have the entry level job training which do not have a specific amount of time because, you will be on the job working while learning and getting hands on experience. 

Below the entry level job training program, is the college degree program. College are split into several different level of education ranging from associate to advanced degree. The more education you acquired, the higher the degree which will result in a higher paying job. An associate degree usually required two years of college, a bachelor is four years, and a master or advanced degree is usually six years of college or more. 

After the college program, we have the armed services which is the military. You can join the military after obtaining your high school diploma or GED at Job Corps. After joining the military, you can select what kind of career you would like to go for, depending on how well you did on the Armed Services Vocational Aptitude Battery (ASVAB) test. 

Educational Investment, Input 2: Money.

The chart below shows you approximately how much it would cost to obtain a certain level of college degree. For example, the average cost for an associate degree is around 3440 dollars per semester, and will required an average of two years to complete, so to calculate the actual cost of an associate degree, you would need to take 3440 x 4, since there are 4 semesters in 4 years, (2 semesters for each year). The Bachelor degree cost can range from 94010 - 64,974 dollars, or more depending on the type of degree you are planning to get. The advanced degree can range from 37,500 - 68,5047 dollars (plus the cost of the Bachelor degree). The reason the advanced degree cost so much is because you usually need to have a bachelor degree before you can be enrolled into an advanced degree.

But this does investment actually pay off? Lets run the numbers with an actual example from My PACE.

45 years of work times x 63,010 = 2,835,450 dollars in a lifetime.

If you look at the chart below, you will see that the higher degree you get, the more money you can make over a life time or 45 years of work.

Now lets go ahead and practice some quick math to determine the annual salaries for some of these key levels.

High School Diploma carrier usually makes some where around, 746 dollars per week. If we take 746 x 52 = 38,792 dollars per year.

Now lets calculate how much you can earn, if you have an associate degree. An associate degree holder will make an average of 887 dollars per week. We can take that, and times it by 52 weeks. That will give us about 46,896 dollars per year. An associate degree will yield a better return because it requires more amount of schooling, and if you went for a bachelor degree, the percent increases to over 50 percent. As you can see, the higher the education, the more money you will make. Of course higher degree also means higher cost of education.

Grands, Scholarships and Subsidized Loans.

There are many ways to apply for loan, scholarships and subsidize loans. If you are attending Job Corps, most likely you are qualified for some financial assistant to help you with your college tuition cost. 

Note that, these calculations are national averages which, given that you have met Job Corps’ low-income eligibility requirements, are pretty much a worst-case scenario. College should cost much less for you or possibly nothing, or maybe just a small yearly loan that will be easily paid back with the increased income. Moreover, lenders will adjust your repayment terms if you call them to negotiate and prove your salary can only handle lower payments. All of these options will be discussed in more depth including the use of U.S. News and World Report’s net price calculator shown here in the College Pathway lesson. We just want students to explore whether or not the cost of additional education is probably worth it here. How to pay for it will be worked out in that later lesson. This lesson is simply about calculating whether the investment of time and money seems worth it. In some cases it will not be.

Is it really all about the Benjamin's?

This is not to say that a job that is a less sound investment than a related one is definitely a worse job. Remember lesson 1 regarding money and happiness. We just want to make sure you are going into planning for your future with your eyes wide open. Good career planning involves informing yourself of these options and outcomes before it is too late.

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