An investment in knowledge pays the best interest.
Benjamin Franklin
The meaning of the quote
In 2000, a Columbia Business School student named Todd Combs sat in a room with 165 classmates listening to Warren Buffett take questions on how to break into investing. Buffett reached for a stack of annual reports and trade publications sitting next to him and told the room to read 500 pages like that every day. Knowledge, he said, builds up, like compound interest. Combs took the advice further than most people would. He got up to 1,000 pages a day, joined Berkshire Hathaway in 2011, and now manages a large share of the company’s money.
That’s the mechanism behind Franklin’s line. Money in a bank account grows on its own schedule, and inflation, taxes, or a bad year can eat into it. Knowledge doesn’t work that way. Nobody can repossess a skill you’ve learned or a book you’ve actually finished. It sits inside you, and every new fact connects to what’s already there, so the pile grows faster the longer you keep adding to it.
Economists have tried to put a number on this. A 2018 review of 1,120 studies across 139 countries, published by the World Bank, found that one extra year of schooling raises a person’s lifetime earnings by about 9% a year, and that number has held steady for decades. The S&P 500 has averaged closer to 7% a year over the long run. The data backs up Franklin’s line about interest, more than 260 years after he’s said to have written it.
The quote is also a useful test for how you’re spending your time. Watching 4 hours of highlight reels is spending. Reading one solid article about a skill you want, then trying it, is investing. The gap between the two doesn’t show up in a day. It shows up over a year, then a decade, the same way compound interest looks flat for a while before it takes off.
Try this:
- Pick one skill or subject you keep meaning to learn. Give it 20 minutes today, not “someday.”
- Write down one thing you learned from it. In a month, read back over the list. That’s your interest statement.
About the author
On a Sunday morning in October 1723, a 17-year-old runaway walked up Market Street in Philadelphia with a Dutch dollar and a shilling to his name. He’d fled an apprenticeship under his older brother in Boston, walked through New Jersey in the rain, and rowed the last stretch down the Delaware River himself. Hungry and unsure of the local money, he asked a baker for 3 pennies’ worth of bread and got 3 puffy rolls he hadn’t expected. With no pockets free, he tucked one loaf under each arm and ate the third as he walked, past a doorway where a teenage girl named Deborah Read watched him and thought he looked ridiculous. Years later, she became his wife.
That awkward kid was Benjamin Franklin (1706–1790), who went on to become a printer, scientist, diplomat, and Founding Father of the United States. He’d had 2 years of formal schooling before his father pulled him out to work, and he taught himself the rest, trading candles and soap, his family’s business, for used books whenever he could scrape together the coins. That habit stuck. Franklin built his fortune as a printer, then spent his later decades running experiments on electricity, negotiating with European courts, and drafting the documents that created a country.
The quote is attached to Franklin more often than any historian can pin a source on. The closest match on record is The Way to Wealth, an essay Franklin published in 1758 as the preface to that year’s Poor Richard’s Almanack, the yearly booklet of proverbs he’d printed since 1732 under the pen name Richard Saunders. The essay is built around a fictional old man, Father Abraham, lecturing a crowd on frugality and hard work using lines Franklin had collected over 25 years of almanacs. This exact wording doesn’t appear in the surviving text, but the idea that learning pays back more reliably than any other investment runs through every page of it.
Franklin backed that idea with his own money before he wrote a word of it. In 1731, he pulled together 50 fellow tradesmen to fund the Library Company of Philadelphia, the first subscription library in the American colonies. Members chipped in a small fee and could then borrow books none of them could have afforded alone. It’s the quote turned into a business plan: pool the investment, split the interest.
Resources
- Benjamin Franklin (Ken Burns documentary, PBS)
- The Way to Wealth (Book)
- The Autobiography of Benjamin Franklin (Book)
- Returns to Investment in Education (World Bank study)
- Warren Buffett’s key tip for success (Article)
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