5X Rule: Don't Buy A Course Unless You Can Get A 5x Return In 5 Years


One of the biggest career decisions we can make is how to spend our time and money on learning. If we make the right decisions, we can end up being rich and have a huge impact on the world and in our community. If we make the wrong decisions, we can end up with a massive pile of debt and useless knowledge.

Despite how important working with knowledge is, there are surprisingly few rules of thumb to help us wisely manage our time and money in today's complex knowledge society.

Over the last few years, I've studied the learning habits of many of the world's top innovators (i.e., Elon MuskBill GatesJeff Bezos) and found two important rules of thumb that can help you now...

Here's how much time to spend learning per week

But, these two rules are only half the the equation. They help us manage our time, but not our money.

In this article, I wanted to give you a simple rule of thumb for making monetary decisions about your education.

What rules of thumb should we use for buying courses?

While this question sounds easy, it's actually quite complex...

On one extreme, there is more high-quality knowledge on the Internet than there is time.

On the other end, the cost of higher education is no longer "unquestionable." In fact, many are actually now questioning whether it's worth it at all. In addition, there are now hundreds of thousands of online courses that cost anywhere from $10 to $50,000.


So where should we fall in the continuum?

Enter the 5X Rule For Learning Investments

One place that I've found helpful rules of thumbs for making education decisions is the world of investing.


Because, at a fundamental level, paying for knowledge is an investment decision. We spend money to learn a skill so that it pays us back in the future. Many of the models that apply to investing in assets also apply to investing in knowledge assets.

There isn't one right way to make a knowledge investment just like there isn't one right way to make a financial investment, but here is arguably the main rule of thumb you should know...

5X Rule: If you can't see how you can use the knowledge to make at least 5x the cost of the course in 5 years than don't make the investment.

This rule of thumb comes from three core ideas in the investing world...

#1. Return On Investment (ROI)

Before every knowledge investment decision, ask yourself...

  • What is the cost?
  • What will the financial return be?
  • How long will it take me to get it?
  • What is the likelihood of getting this return?

Then, subtract the interest on the debt if you're making the investment with debt.

#2. Hurdle Rate

Hurdle rate is the minimum ROI that your investment needs to make in order for it to be attractive to you. A hurdle rate makes it easier to make a quick yes or no decision.

I would suggest that you choose a hurdle rate of 5x.

In other words, make investments in knowledge when you have a high degree of confidence that you will see a 5x return in five years. Put in another way, if you spend $1,000 on the course today, you will see $5,000 back into your pocket if you fully apply the course to your life.

#3. Opportunity Cost

Course investment decisions aren't made in a vacuum.

You also need to consider the opportunity cost. If you invest $1,000 in one course, that's $1,000 you won't have to invest in another course. Or you could pocket the money and try to find the knowledge for free.

Ultimately, we want the best return given all of the other options we have.

So, step #1 is getting a lot of good investment options in play. Then, step #2 is making the best one.

At this point, many people may wonder, why would I pay for a course if I can get the knowledge for free. Here are five reasons why...

  1. Personalized Feedback. According to research, one of the keys to developing skills fast is deliberate practice. And one of the keys to deliberate practice is feedback from an expert. This feedback helps you see your blindspots and gives you guidance on how to fix them.
  2. Peer Relationships. Right now I am in a $24,000 mastermind. For me, the relationships alone are worth more than the cost of the program. In my experience, a higher investment price typically attracts people who are more committed and successful.
  3. Coaching. Coaching is another key factor that makes up deliberate practice. Look at basically any professional athlete, and you'll see a coach. If you want to be world-class, you probably need not just one coach, but multiple coaches.
  4. Accountability. The structure of the course creates pressure and momentum to learn the skill now.
  5. Save Your Time. An outstanding course saves your time from searching and weeding through information online. In addition, it hand-delivers the important, high-quality knowledge in the right order.

With all of this, keep in my mind, the 5X Rule is for knowledge investments you are making based off of financial returns. You may want to invest in a course for a non-financial reason (ie - pursuing a hobby you enjoy). In that case, the 5X Rule would not apply.

Finally, remember this...

The value of the course ultimately depends on you...

To make money from your courses, you need two things..

  1. To put time into learning and applying the knowledge.
  2. To learn how to learn so you increase the results you receive from each hour of learning by using proven hacks.

Over the last five years, I’ve researched how top performers find the time, stay consistent, and get more results. There was too much information for one article, so I spent dozens of hours and created a free masterclass to help you master your learning ritual too!

Sign up for the free Learning How To Learn webinar here >>

Special thanks to hundreds of members in our 300,000-person Learning How To Learn Group who took time to reflect on their rules of thumb for making learning investments.