Who will be the world’s first trillionaire?
Every year, returns to capital investments continue to increase while returns to labor continue to decrease. In addition, the disparity between productivity and hourly income continues to grow larger. Essentially, our labor is getting cheap while automation is becoming highly profitable.
As a result, many experts think that the world’s first trillionaire will be created by wealth generated from investments in AI. But how can those of us who are not Bill Gates or Jeff Bezos invest in an AI-first economy?
Here are my top five recommendations:
The best investment you can make right now is an investment in your education and your career. I’ve covered this topic in-depth in my previous two articles on Educating Yourself About AI and Upgrading Your Career for AI. However, it’s important enough to be stated again. The best investment you can make right now is an investment in yourself.
There are currently many problems that exist in our day-to-day lives that are perfect candidates for AI-enabled solutions. In addition, as this technology improves, there will be even more opportunities for those who can leverage AI to solve real-world problems.
If you’re a business owner, you can use AI to improve business operations by automating manual processes. If you’re an employee or a contractor, you can use AI to increase your personal productivity with off-the-shelf AI tools. Outside of work, we can use AI to make our lives more enjoyable by automating chores we don’t enjoy doing.
As we continue to automate more jobs each year, our labor is becoming progressively less valuable. This includes manual labor, knowledge work, and even some highly specialized labor. As a result, it’s important that you don’t depend solely on your labor for income in the coming years.
Instead, you need to begin putting your money into wealth-generating assets. These include investing in companies, selling your own products, or providing automated services. Your labor can only make you money while you’re working — roughly 8 hours per day. However, wealth-generating assets can make you money 24-hours a day, even while you sleep.
Some companies will win and others will lose in the new AI economy. However, on balance, AI-enabled automation will ultimately lift the entire economy. You don’t need to outsmart the markets, work for Google, or be a multi-millionaire to profit from an AI-first economy. You just need to invest in the economy as a whole.
You can do this by investing in index funds with low expense ratios to diversify your risk across the entire stock market. In addition, you should buy low and hold all of your investments long term. However, you need to have a financial safety net in the event of an economic downturn, so you want to have just enough in bonds and semi-liquid assets in case you lose your income during a recession.
Exponential growth curves — like the growth of GDP per capita in the USA — start out slow and explode quite rapidly. In addition, exponential economic growth has been surprisingly stable over the past few hundred years. As a result, the sooner you invest in our AI-first economy, the better off you’ll be (exponentially).
The next Googles, Amazons, and Microsofts are out there now or soon will be. However, you don’t need to find them yourself. Your index fund will find them for you when the time is right. You just need to invest now to reap the rewards of long-term exponential growth.
To learn how to invest in an AI-first economy, please check out my free online course Artificial Intelligence: Preparing Your Career for AI