The Biggest Mistake 20-29 Year Olds Make

This video was made possible by brilliant.org. There are four essential facts that every 20-year-old should know that most are never taught.

One: Your energy is a limited resource that you are consciously or unconsciously investing each day.

Two: How you invest your energy determines the outcomes of your life.

Three: Most people will convince you to invest your energy into things that benefit them, not you.

Four: You will likely never have as much disposable energy as you do in your 20s ever again.

And because most 20-year-olds don't consider these four facts deeply, they make one big mistake: they don't invest enough energy into building a strong foundation for the rest of their lives. They get lost in the pursuit of pleasure, and until they realize the enormous cost pursuing pleasure will have on their future, they will keep spending their most potent and fertile years on things that will never pay them back.

In the future, the cost of chasing pleasure and comfort in your 20s is regret in your 30s. But if you become disciplined and invest your energy wisely in your 20s, you will be surprised by what you achieve by 30. If you sow the right seeds early on, you will reap an abundance of health, wealth, intelligence, love, and strength in the future.

Abundance is necessary in tough times, but it requires forethought to produce. Abundance is also helpful to the community, so the abundant often become leaders. If you become disciplined and invest your energy wisely in your 20s, you will be dependable and resilient in your 30s and beyond.

And there are three concepts you need to understand to become disciplined—concepts that explain why you need to invest your energy properly in your 20s and how best to invest it. Those concepts are compound interest, purchasing power, and the five best assets to invest in.

The first thing you need to understand to be disciplined is the relationship between your energy and compound interest. Imagine this: the year is 2024, and we have two 20-year-olds, Jack and Jill. They both have $5,000 to invest every year. The money is a metaphor for their energy, which I will fully elaborate on later.

So, Jill invests her $5,000 a year in an asset that increases by 7% in value each year—that asset represents a good habit. Jack invests his $5,000 a year in an asset that decreases by 7% in value each year—that asset represents a bad habit. In the first year, they both have equal value in their accounts: $5,000. But in the second year, they have slightly different values.

Jill, after a 7% increase and investing $5,000 more, has $6,350. Jack, after losing 7% and investing $5,000 more, has $4,600. Jack looks at Jill's account and doesn't think much of it; in his eyes, they practically have the same amount. So this pattern continues: they each invest $5,000 a year and gain or lose 7%, depending on the asset they are invested in.

After 10 years of investing, Jill has about $69,000 in her account, but Jack only has around $37,000. At this point, Jack looks at how much more money Jill has and feels regret. How did she get so far ahead? By consistently investing her money into something that would compound positively over time.

Compound interest turns small investments into huge payouts over time, and it's really the only way to generate wealth and abundance in any domain. Now, if we apply this metaphor to habits, the same logic applies. If you invest in good habits early on, you will appear slightly different from your peers in the beginning. But over time, your good habits will compound and accelerate your growth, and you'll be way ahead of your peers by the time you enter your 30s. That's the power of compound interest.

But compound interest is only one of the three pieces of our puzzle. The second piece of the puzzle you need to understand is purchasing power. Let's go back to the financial metaphor: imagine now that instead of having $5,000 to invest each year into an asset, Jack and Jill lose $200 worth of purchasing power each year.

Of course, as you can see, as their purchasing power goes down, so do their payouts. This is exactly how your energy works too. As you get older, you have more responsibilities that place a demand on your energy, like taking care of the house, family, loved ones, and yourself. You also have more bills to pay, and you start getting sicker and losing strength.

The amount of free energy you have to invest is usually the highest in your 20s to mid-30s. After that, it tends to decline due to decreasing strength and increasing demands on your time. For example, as you get older, your eyes get weaker, so you can't read as much, or your energy declines, so you can't work as long as you did in your 20s.

And the less free energy you have to invest, the harder it is to make big, sweeping changes in your life. The easiest time to form good habits and break bad ones is while you're younger and your energy is unburdened. It only gets harder as you get older and more stuck in your ways.

Most young people never consider how declining purchasing power will reduce their freedom as they age. You will most likely never be as strong, vibrant, and as full of potential as you were in your 20s and early 30s. So that's the second piece of the puzzle: purchasing power.

Now let's talk about the final piece of the puzzle: the five best assets to invest your energy into. There are five key forms of capital that you should be trying to acquire while you are young. They are productive capital, spiritual capital, intellectual capital, social capital, and physical capital.

Productive capital is a measure of how much expertise you have in an area. You want to develop an area of expertise as soon as possible while you're young, because the more expertise you have, the more valuable you'll be to society. The more valuable you are to society, the less trouble you'll have making a living for yourself.

Spiritual capital is a measure of how strong your conscience is. Your conscience is the best guide you'll ever have access to, so the stronger it is, the more easily you'll be able to make wise decisions. If you don't consciously use and strengthen it while you're young, you'll lose it as you get older and become more lost in life.

Intellectual capital is your ability to transform negative emotions such as depression, longing, and anxiety into insights and productive action. As you get older, the stress in your life increases, and as stress increases, so do negative emotions. If you don't learn to process your negative emotions correctly, they will eventually overwhelm and devour you. But if you learn how to transform your emotions as soon as possible, you'll be able to leverage them for insight and productivity.

Social capital is a measure of how many deep relationships you have. Depth is more important than width because true social capital is about the quality of relationships you have, not the quantity. Depth is measured by the number of people who would voluntarily go through difficult times with you. Life is impossible to do alone, so you want to have a strong community around you—a community that helps you when times are tough and celebrates with you when times are good.

As you get older, developing these kinds of relationships gets tougher, so start as young as you can. Last but not least, physical capital is a measure of how healthy you are. As I said before, your physical health naturally declines as you get older, but you can keep your strength up for a long time if you have good fitness, sleep, mental health, and diet habits.

And the more strength you have, the more free energy you have to invest in building your dreams. If you invest your energy into acquiring these five forms of capital while you're young, you will be incredibly grateful for it by the time you're 30.

Now that you understand compound interest, purchasing power, and the five best assets to invest your energy into, the final thing to do is to construct a daily schedule. Create a daily schedule where you invest a little bit of time and energy—maybe 20 to 30 minutes—into acquiring each of the five forms of capital: productive, spiritual, intellectual, social, and physical.

This schedule should be sustainable for the long term; otherwise, you'll never reap the benefits of compound interest. This schedule will allow you to invest in pleasure and fun, but at the same time, it ensures that you're investing time and energy into habits that will pay you back well in the long run. If you do that, you'll make incredible growth in your 20s and enter your 30s in an amazing position.

Now you know the mistake you have to avoid in your 20s: investing your time in the pursuit of pleasure. You know why your 20s is the best time to invest in good habits, because it's when you have the highest purchasing power and can benefit the most from compound interest.

And lastly, you know how to implement these ideas by creating a sustainable daily schedule that allows you to acquire the five forms of capital. If you want more specific details on building each of the five forms of capital, stay tuned for my next video.

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