In this kind of financial environment, with the volatility of the market, the crash of the housing industry, the uncertainty of the global economy, and the high unemployment rates around the world many people are saying that a job is a person’s greatest asset. There was a time when I would have disagreed with this. I might have pointed at some extremely promising growth or value funds, the inflating housing bubble, carefully maintained 401(k) plans, Roth IRA and other savings accounts. But the times have changed, and so too has our ability to judge the value of our assets. Investing in your most valuable asset can do much more than picking the right stocks or funds for your retirement account.
When the economy went south many people not only lost their jobs, they lost their pensions, health care plans, stock investments, and, in some cases, their houses. Some people lost everything and won’t be able to get it back, at least not in its previous incarnation. Except for one asset, and that is the job. No matter how much your home or market investments have been devalued, a job is a still the one asset that, depending on your job security, you can rely on.
This isn’t to suggest that you must be employed—many people employee themselves, or work freelance for a multitude of different clients. By ‘job’ I mean source of income. However you are generating consistent revenue is now the most likely way you are going to build financial value in the short and long run. It’s important, therefore, that you begin to think of work and labor as a form of financial investment. You are investing in your long term ability to generate income and use your greatest asset to save for the future.
This also isn’t to suggest that there isn’t money to be made in the stock or housing markets. In fact, there’s probably never been a better time to scoop up undervalued stocks, funds, homes, and properties. If you’ve got the stomach for flipping, you could find yourself rich in a couple decades. But this is for people who have the financial padding to withstand short term losses and sit patiently on what could be some fairly nasty temporary dips.
For most people, the home is no longer the symbol of wealth it once was. In fact, for many homeowners trying desperately to refinance their mortgage, the home is now the symbol for debt. Similarly, for many investors, the scroll of stocks going by on their televisions or web browsers used to be the sign of increasing value and long term earnings—now it’s the sign of a lost nest egg. While most shrewd financial planners were able to get back on track, whether by frugality or enlisting help, many people have still not recovered.
But provided these investors have continued with their career paths, they’ve still been growing and cultivating a critical asset—their jobs. Take an average salary, such as $50,000 a year. Over the course of a decade, this adds up to half a million dollars. You work twenty years, you’re a millionaire. Now clearly this is an extreme simplification. You’ve got taxes, the cost of living, and dozens of other factors that will diminish your funds. But the fact reminds, you will have earned a million dollars.
So, if you’ve got a job, hold on to it, fight for it, work for a promotion—treat your job like you once treated your investment portfolio. You can’t rely on your home’s value recovering, nor can you count on a certain stock or fund performing well. All you can depend on is your own ability to clock in and earn a consistent paycheck. Hunker down, work for twenty years, saving as much as you can. One day hopefully you’ll wake up and realize it didn’t get as bad as you thought it would.
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About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.