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Why Your Career is Your Most Important Investment

by Kevin Mercadante

I hate my job…I can’t wait until I retire…I’m going to save and invest every dollar I have so I can quit my stinkin’ job…I wish they’d lay me off and give me a severance package…

Bored office workerDo you ever find yourself thinking this way? Most people do. Ironically, it’s probably the number one reason motivating people to save and invest their money—planning their great escape from the job. That’s not a bad thing either, but maybe we need some balance.

Your career is an investment all its own; consider the following:

  • Your career is what sustains you until the day you can afford to retire
  • You’ll probably live on the income from your job a lot longer than you’ll live on the income from your investments
  • You need money to invest—that will mostly come from your career
  • Your career is the foundation upon which all other investments will be made
  • If your career isn’t working, your investments probably won’t either

And there are a few more considerations that rate their own discussion…

Very few people have enough money to not work

Millions of people work diligently to save and invest their money. But relatively few will reach a point of being able to live completely off their investments, at least not before retirement. And even then, most will continue to rely on non-investment income for some significant portion of their survival. That may be Social Security benefits, an employer pension or continuing income from a job or business.

Your career is a diversification to your investment portfolio

There’s nothing scientific about investing. Stocks, commodities and real estate both rise and fall in price, and sometimes they can even crash. Fixed income investments don’t usually drop in value, but as we’ve seen in recent years, interest rate yields can drop to near zero. If you’re relying completely on your investments to provide for you, it can be a rough ride.

We normally think of investments as being a diversification against the possibility of a job loss, and that’s true. But what we don’t usually think about is how a career is probably the best diversification against investment uncertainty. The income from a paycheck is never more valuable than it is after a stock market crash.

Your career is your best investment in a changing economy

While it’s true that you can lose your job as a result of economic changes, it’s equally true that you can recover too. That may involve retooling for a new career, or entering into a new business venture. The same economic shifts that can destroy careers and industries, also creates new ones. The reality is that the majority of us can find paying work somewhere doing something, even it it’s at a much lower rate of pay.

The same isn’t nearly as true of other investments. Stocks and real estate can take years to recover from a major decline. In the meantime, there will be little that you can do to recover your losses until the overall market improves. And if you sell at the bottom of the price cycle your losses will be locked in forever.

Work is your connection to the world

Invest in your careerThough we don’t think about it when planning for retirement, much of our emotional health is tied to our work. It’s where we make our contribution to the world, where we come in contact with the greatest number of people, where we learn to rely on others, and they can rely on us. In a very real way, our sense of legitimacy comes not from what we have, but from what we do. And much of that comes from our careers.

If you had to start all over again, you’d start with your career

Imagine for a moment that you lost all the wealth you have; where would you start the rebuilding process?

It would almost certainly be your career. You’d work harder at your job or business, and if you didn’t have either you’d go out and get one. It would be the first step in your quest for financial recovery.

Very few people can invest their way out of a financial hole. The reality is that it takes money to make money, and if you’ve been wiped out financially, you won’t be able to do that. A career, on the other hand, doesn’t usually require much money. It relies on the services you provide, not on your capital.

Keep the investment in your career growing

If your career truly is an investment, what can you do to make it grow and keep paying you “dividends” in the future?

  1. Stay on top of changes in your field and do what you can to be ahead of them
  2. Get any extra training you need to do your job or run your business—education doesn’t stop when you graduate from high school or college
  3. Be a problem solver—anyone can do a routine job, but it takes an expert to fix what’s broken
  4. Don’t run away from challenges, embrace them and lead others forward
  5. Keep your eyes and ears open for side business opportunities—you never know when you might need a career change and this is one of the lowest risk ways to do it

The economy and the job market are in a state of constant change. The best way to invest in your career is by doing what’s necessary to both retain and increase your market value.

Think of your career as an investment. It’s the best diversification to other parts of your portfolio that don’t always behave as we think they should.

Have you ever thought of your career as an investment?


Published or updated November 2, 2012.
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{ 8 comments… read them below or add one }

1 Rohit @ The Money Mail

We live in a very dynamic world. Skills that are in demand today can very well be outdated tomorrow. This is true if you are in an industry which is very technology oriented like a web designer, programmer. You must constantly add new skills to your technical skills

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2 Kevin Mercadante

Hi Rohit–That’s very true, and it’s just like investments. Some are good today, but won’t be in 2-3 years. We no longer have the luxury of coasting! That’s why, at a minimum, a career should be viewed as a diversification to an investment portfolio. That might even cause us to rethink the whole idea of retirement!

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3 krantcents

I agree and there are good and bad investments. I think you should start with choosing a career that you will like. If you like what you do, you will probably be good at it and become successful.

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4 Kevin Mercadante

I agree with doing something you will like. That will take the drudgery out of it too.

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5 Jon @ MoneySmartGuides

I’ve always looked at my career as an investment. I continue to take classes and attend seminars to make me as valuable as I can be so I can get the most pay possible.

I worked with someone who hated their job and wanted nothing more but to get laid off. He was smart in that he invested in the company stock program his full 15 years while at the company so that when he finally had enough, he quit and used the money in the stock to pay off his mortgage. While he isn’t set for retirement and needs to work, he at least took advantage of the time there and the benefits the job offered.

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6 Kevin Mercadante

Hi Jon–In a way both you and your friend were investing in your careers, though in different ways. That also highlights the periferral investments that come with a career, like the 401K, company stock and sometimes stock option. This highlights how your career is the foundation of all of your investments.

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7 Cherleen @ My Personal Finance Journey

I totally agree. We should invest in our career to stay on top of our career. I remember when I was young and deciding which college course to pursue, my dad told me to choose a career that I love, where my passion is, so that I will not feel the stress and burden of the work that I do. Based on my experience, I also realized that continuous learning is one of the main keys on staying ahead of your colleagues. We should not be complacent because we live in a changing and ever dynamic world.

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8 Kevin Mercadante

Hi Cherleen–That’s so true. So many people want a job that can be run on automatic pilot but those days are gone. We all need to stay on top of industry developments and what we need to stay competative. It may mean more pressure, but what’s the choice? If we can think of it as investing in our futures it may not seem so disruptive.

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