Your biggest financial asset is your ability to earn a paycheck.

Your best investmentWith all the attention and occasional hand-wringing over the retirement savings gap facing millions of Americans, one observation often goes unmentioned: your biggest financial asset, or at least one of your biggest assets, is your ability to earn a living.

That is not to dismiss the way that people build wealth, which typically is through owning stocks, bonds, real estate, and owning or buying a small business. But we also need to remember that the wealthiest Americans, such as billionaires Warren Buffett and Microsoft founder Bill Gates, amassed their fortunes by owning a piece (or all)  of a company or companies they built or acquired.

Even if you’re not at their level, you have been able to achieve what you have through your education and hard work. By education, we mean what you’ve learned beyond high school or college over the course of your career, and by hard work, we simply mean, hard work. The point of this article is that if you want to build a comfortable financial future, even if you are perfectly happy with your current situation, you need to invest in your career.

Following are three important tips:

  1. Appreciate how economics rewards you.  Just as with any investment from which you expect a fair return, your ability to earn a living is a function of what the market will pay you for your job skills and talents. Derek Jeter of the New York Yankees gets paid handsomely for his ability to hit and field a baseball, because there aren’t that many ball players who can play at his level. Similarly, your ability to perform a job has an economic value in the workplace that is reflected in the salary and benefits you enjoy. You may be surprised to understand how the economic value underlying the work you do translates into the return, or compensation, you receive. For example, let’s say you make an annual salary of $30,000. To earn an equivalent of $30,000 in a year from your investments, you’d need to have a nest egg of $600,000 returning 5% per year. For most people, building a nest egg of $600,000 takes decades of earning consistent returns (and few losses). Very few financial assets can reliably generate the kind of return that you make from your job each year.
  2. Invest in your education.  If you don’t continually invest in increasing your knowledge base, you risk losing your competitive edge. Your skills and perspectives can become dated and obsolete. For example, almost all modern machinery depends, to some degree, on digital controls. If you haven’t learned how to master these sophisticated machines, you may not be able to continue demonstrating the value you add to your company. The best organizations to work for recognize this fact and invest in their workforce through ongoing training and career development—often at no cost to you. Take advantage of these opportunities as much as possible.
  3. Make the best use of your time. You shouldn’t feel the need to work 80 hours a week and never have any fun. Life balance is the key to personal satisfaction and career fulfillment. But you should spend a portion of your “work” time updating and building your skills, whether learning a new computer program or enrolling in a technical training course or project management workshop. That way you can be sure to maintain your competitive advantage, and protect your earning power.


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© 2013 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.

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This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. LPL Financial and its advisors are providing educational services only and are not able to provide participants with investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own, separate from this educational material.

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