The Aviator’s Dilemma: Index Funds vs. Self-Investment

Do you remember why you became a pilot?

It was the responsibility, the decision-making, and the freedom that came with being in control of the aircraft.

However, when it comes to investing, many pilots unintentionally relinquish that control. Most are advised to invest everything in index funds and let them grow. Even though it sounds simple, you don’t have control over the outcome. 

The other option here is self-investment. When you invest in yourself, your decisions affect your outcome. If you’re wondering which option is best for you as a pilot, we’ll break down both approaches, what they offer, where they differ, and the kind of control you want over your financial future.

Key Takeaways: Index Funds vs. Self-Investment

• The Spectator Trap: Pilots often hand control of their time and their money to institutions. In both cases, someone else makes the decisions, and you simply follow the system.
• What Index Funds Offer: Index funds are simple, passive, and historically produce steady returns. However, you don’t control which companies you own.
• What Self-Investment Means: Self-investment focuses on skills, businesses, or assets where your effort increases the return. Instead of hoping for market performance, you influence the outcome.
• How to Choose One: If you want passive growth over decades, index funds work well. Meanwhile, if you want autonomy, control, and faster financial upside, self-investment aligns better with those goals. 

The Spectator Trap

The spectator trap is similar to the career comfort trap that we covered earlier. However, in the spectator’s trap, there’s an overlap between career and investment. It shows that investing in index funds is the same as an airline career. 

How? 

When you invest only in index funds, you hand your money to institutions and hope they make the right decisions. That might sound familiar because, as a pilot, you operate within a system someone else built. 

In both cases, you don’t get to choose the companies, your income, or your schedule. 

What Index Funds Offer

Index funds are simple, familiar, and comfortable, and that’s exactly why most pilots default to them. They remove complexity by letting you buy a slice of hundreds of companies at once instead of choosing individual stocks. 

Rather than investing in a single business, index funds automatically spread your investment across hundreds of companies in an index like the S&P 500. You don’t have to analyze any financial data or evaluate opportunities. 

Simply ride in the direction the market moves. And because index funds are designed to track the market, you don’t outperform it. 

Benefits of Investing in Index Funds

There are very real advantages to index funds. They’re simple, low effort, and historically reliable. Here are some of the benefits of investing in an index fund: 

• You don’t need to research businesses or manage your investments.
• Diversification helps reduce risk.
• Broad index funds have averaged over 10% per year since 1957.

For individuals who prefer predictability and minimal involvement, index funds offer a straightforward way to participate in the financial market. The best part is you don’t even have to learn how to invest or research. 

What Self-Investment Means

Self-investment is not trading stocks on your phone, chasing crypto spikes, or trying to predict which company will outperform the market. It is the decision to invest your time, money, and energy into something you understand and can influence. 

Unlike index funds, self-investment allows you to improve the outcome through effort and skill. In fact, studies show that upskilling has historically helped increase income by at least 8.6%, which would be equivalent to $8,000 on a $100k income. 

Examples for Pilots

Here are some real, practical ways pilots can invest in themselves, without quitting flying:

1. Start a Consulting or Training Business

Pilots have specialized knowledge that people are willing to pay for. This includes safety culture, aviation mindset, operational efficiency, CRM training, and other relevant aspects. In simple terms, investing in something like this would look like: 

• Creating a course or program for student pilots
• Running simulator prep sessions for cadets or new hires
• Offering CRM/human factors workshops for non-aviation companies

2. Buy Into Aviation-Adjacent Assets

Pilots understand the aviation world better than most investors. That gives you an edge, and that edge can help you build wealth beyond the cockpit. For instance: 

• Owning hangar space and renting it out
• Investing in flight schools or maintenance operations
• Taking equity in companies serving pilots (crew transport, apparel, aviation tech, etc.)

Index Funds vs. Self-Investment: Which One’s Better?

Both options grow money, but they grow different futures.

Index funds give you financial growth without requiring involvement. Meanwhile, self-investment leads to financial growth because of involvement.

A useful way to compare them is: 

How to Decide Where to Allocate Your Money

Most pilots think investing is a binary choice: either put everything into index funds or take a leap into business or self-investment. But it doesn’t have to be all or nothing. The real question isn’t where your money goes first.

Ask yourself: 

Do you want your money to follow the market, or do you want your money to follow your goals?

Here’s a simple framework to help you decide.

Step 1: Define Your Desired Level of Control

Initially, you need to ask whether you want a hands-off investment where I don’t make decisions, or if you want control and the ability to improve the outcome. 

For something effortless and slow, index funds do precisely that. On the other hand, if you’re looking for growth that reflects your skills and self-investment, it’s the better path. Remember, money should reflect intention, not default behavior. 

Step 2: Clarify Your Timeline

Index funds are designed for long-term investment. Their power is long-term compounding over decades. Self-investment helps you create income now, in this season of life.

For instance, if you’re trying to buy flexibility, time, and options earlier in your career, waiting 30 years for compounding doesn’t align with that goal.

Step 3: Evaluate Your Unique Advantage

The greatest returns come from areas where you have:

• Skill
• Experience
• Context
• Access

Pilots already have an edge in aviation-related opportunities, including training, consulting, hangars, flight schools, and aircraft partnerships. You don’t get that kind of advantage when you invest in an index fund.

Freedom Comes From Participation, Not Passive Hope

You became a pilot because you wanted control. But when all your income and investing decisions depend on systems built by someone else, that control fades. This is where self-investment empowers you to shape your financial future. 

At Aviator Entrepreneur Academy, we help pilots transition from passive spectators to confident participants. You don’t have to figure out the next chapter alone. You’ll receive the tools, guidance, and a proven framework that pilots have already utilized. 

So, if you’re ready to explore what life after the sky looks like, book a free strategy session! 

Invitation to Join Our FREE Strategy Session

Most pilots are one honest conversation away from clarity. This is that conversation.

Complete our “Life After the Sky” checklist, then join me for a FREE 15-minute “Strategy Session” via Zoom.

This session is for pilots who want to take ownership of what comes next.
Those who want action, not just to talk about it.

In just 15 minutes, we’ll:

• Review your checklist results
• Identify the one obstacle holding back your reinvention
• Translate your checklist results into a clear starting point

Start your pre-flight assessment for the next chapter of your journey by Booking your free strategy session here!