The Last Safe Investment Isn’t What You Think…

“False wealth is the accumulation of finite resources in the hopes of satisfying infinite desires.”
The Last Safe Investment, by Michael Ellsberg and Bryan Franklin

Mutual funds. A college degree. A home. These are the best vehicles to invest in for a return — so we are told. But does this typical advice have a “blind spot”? We think so. And it’s a whopper.

Not until after the dotcom bust in 2000 and the financial crash in 2008 did many Americans wake up and realize that “Financial Advice Commonly Derived,” or FACD, simply had not worked for them. You know the narrative: go to work and earn a living, scrimp and save, invest those savings in markets (where, um, you have no control), and then watch the money magically multiply (an alleged 7% annualized). Voila! After 30-40 years, you can retire and be happy—via delayed gratification.

“The plan is broken at every step,” says Michael Ellsberg, co-author, with celebrated Silicon Valley strategist Bryan Franklin, of The Last Safe Investment, a provocative game-changing book published last year. “The investing part is totally devoid of your human capital,” he points out. “It separates investing from anything you have skill or control or domain over. Which we think is a pretty big problem.

“The safest investment,” they write, ” is the thing you have the most control over: you.”

The challenge, of course, is how. Franklin and Ellsberg offer up a refreshingly brass tacks approach to identifying what are economically (and otherwise) your biggest leverage points in what they acknowledge is “a class of assets most people don’t think of as investments.” They are systems-thinkers, and this wildly holistic approach invites a substantial re-think. And it’s a paradigm that requires actions on several layers to create what they call a “Self-Amplifying Financial Ecosystem,” or SAFE.

Before moving on to SAFE, it’s useful to back up a moment and understand why FACD (a clever term they coined) failed so many people. One reason, Franklin mentioned in a talk at Google Inc., is that FACD “optimized for one aspect of a system at the expense of the larger system”—a strategy he says always results in the collapse of the larger system. Specifically, in terms of individuals, FACD has optimized for net worth.

Here’s the problem: As humans, he said, we don’t care intrinsically about having a lot of static wealth; we only want it for what we think it will provide—things like life experiences, access, privilege, options, freedom, and security. The purpose of any long term financial plan is to be happy, particularly over a long period of time. What has an impact on long-term happiness? Enough sleep. Doing things with friends. Being of service. And learning.

“These are exactly the kinds of things we would sacrifice to make money,” he pointed out. “We suggest you invest in things that give you more economic opportunity but also allow you to be in connection with people you care about.”

In fact, the authors argue that an investment in your human capital outperforms everything else. Even if you invest $2000 per year, and earn 25% per year, your base is so low that it’s hard to make much. Your human capital, on the other hand, is the net present value of your lifetime earnings—something that includes everything you bring to an hour of labor that adds value to that hour (other than the capital equipment you are using.) Even small improvements to that human capital multiplies the value you bring to others, and the value you receive in return (in terms of pleasure and satisfaction as well as financial rewards).

So how do you actually invest to make your existing technical skills more likely to lead to promotions and higher earnings? Franklin asserts, “It’s fairly predictable,” explaining that the value of market skills and technical skills are driven by market values for that particular skill, which change over time and are unpredictable (especially globally). However, some highly-valued skills top the list in a predictable way.

Super Skills Expand Your Earning Capacity

Super Skills are any skills that have a virtually guaranteed return on investment regardless of your professional circumstances because they have a positive systemic impact on all of your professional skills, and by extension, your earning power. If you have technical skills, for example, sales skills will take that to the next level.

There is a finite list of Super Skills, but the authors especially emphasize interpersonal “CEO” skills involving the ability to inspire and influence others; things like public speaking, teaching, and selling. And in the digital economy, communications skills like writing, copywriting, storytelling (all of which may involve selling ideas or raising funds, even in the nonprofit world) are increasingly important.

“Super Skills can multiply your earnings by 5X, 10X, even 100X,” claims Franklin. “It is surprising how much you will set yourself apart if you learn how to speak publicly, and it’s surprising how easy and inexpensive it is. It is probably the most leveraged investment you can make.”

But it’s leveraged even  more in the context of the entire SAFE system, which, condensed for brevity, works like this (and notice how holistic it is compared to accumulating a financial-only net worth):

  • Money creates experiences
  • Experiences create self-development
  • Self-development creates value
  • And value creates more money.

This system creates what the authors refer to as “True Wealth,” or what we might think of as holistic prosperity. It involves developing three disciplines: spending systematically, increasing your value to others (already discussed), and increasing your Happiness Exchange Rate. These disciplines, in turn, help you develop three assets: Savings, Tribe and Advisor Equity.

Spending Systemically: Everything Is An Investment

The conventional wisdom, as the authors put it: “Buying shares in an Internet company is investing and buying groceries is spending.” After they’ve depleted their income on day-to-day necessities and unconscious spending, most people have little money left to “invest.”

The idea here is to view absolutely everything you buy as an investment—yes, including those groceries. The key is to examine these investments “systemically,” meaning from every aspect of your life. High quality food, for example, is not just about your food budget; it’s also about improving your health, your productivity at work (and thus, possibly, your earnings), etc. 

Your “Happiness Exchange Rate” 

We want a certain amount of material comfort and money in the bank (external wealth), but we also want them to make us feel happy, free or secure (internal wealth). Whenever we engage in a financial transaction, we are converting external wealth into internal wealth, which is a measure of something the authors call your “Happiness Exchange Rate,” or HER: The more we spend in order to be happy, the more expensive that happiness is.

In our failed attempts to obtain internal wealth, we typically waste a lot of money, thus our HER may well be our biggest expense. The good news is that we can use systemic spending to get a discount on our HER, and cut costs. Since the key is mindfulness about what makes us happy, cutting costs can actually be pleasurable. We then have more cash left to plough into savings, while feeling happy rather than deprived.


Once you’ve increased the efficiency of your Happiness Exchange Rate, you will have more cash flow left to save. A lot of people think that when they put money into a 401K or IRA, that’s savings. As I like to explain, it’s not! That’s investing—and risking.

The authors argue that we should not risk our money where money is the only thing we get back. Instead, there should be some value, such as a learning experience, in the risk itself. Meantime, everybody needs savings—and, they argue, it really should be savings. Boring, perhaps, but essential.

We couldn’t agree more. In our family, we have found it really helps to have a “savings bill” to pay each month. We save in whole life Insurance policies which give us a safe and healthy long-term return, much better than what banks pay, plus the ability to leverage our cash value as needed (which can come in handy in the business world) while also providing additional death benefit protections.


Tribe, which is a subset of the community, is how you build your social capital. For it to be a tribe, everybody in the group must know everybody else—and it must be based on the value of contribution and being in service.

Building a social circle takes time and costs money. But the authors argue that this is the most self-amplifying and high leverage of the True Wealth assets, with returns (both professionally and personally) exceeding anything available to the average investor through the public markets or even the Super Skills, when used in isolation. The best way to meet people at networking events, they add, is to host the networking event.

Advisor Equity 

So, increasing your ability to add value to others (the core of investing in yourself), involves mastering Super Skills and developing Tribes. But how does this relate to retirement, where we want to stop adding value but still collect value? This is where compensation can be diversified and divorced from the time spent “working.”

Advisor equity works like this: any time you help others succeed, perhaps through mentorship, advice, making an introduction, consulting or simply lending a hand, you are creating value and building equity. You might be paid with money, equity in a company, goodwill, or access to relationships or perks (perhaps a vacation home or an invitation to an exclusive event). All of these forms of “compensation” add to your happiness and quality of life.

Any of the Super Skills could help you build advisor equity, with probably advice on sales, marketing, copywriting and web development representing the lowest hanging fruit. But ordinary work in exchange for equity; assisting, consulting, cooking, programming, painting etc. is valuable, as well. “Far more wealth is made helping people bring their ideas to fruition,” they note, “than will ever be made developing the idea from scratch.”

Redefining Wealth

Like Franklin and Ellsberg, we believe that financial planning has failed, as our own book on the topic testifies (download Financial Planning Has Failed as our gift). We recommend safe investments rather than risk, and prioritizing saving. We consider our “human life value” and our unique ability to be our most precious asset—financially and in every other way. And we advocate for unconventional “retirements” that extend our contributions to—and from—the world around us.

The Last Safe Investment to will cause you to re-think your financial paradigm in a way that will challenge and inspire you. We agree that Prosperity embraces health, happiness, and many aspects of life—not just money, and commend the authors for communicating this important message in such a compelling way.

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