Your Greatest Asset is The Ability to Create Income

by Ryan Guina

What is your greatest asset? Most people think it is their house. They are wrong. Bank account? Wrong again. For the vast majority of people, the greatest asset they have is the ability to generate income. Think about that for a moment… How does the mortgage for the house get paid? How does that bank account get filled? How do you repay debt, fund retirement and investment accounts, or pay for food, shelter, clothing and other life essentials? Unless you are independently wealthy, you work to create this income.

Yes, there are people have reached the crossover point with their investment portfolio (the point at which their investments consistently earn more than they do at their day job). But many people who reach that point still need to work to maintain their current standard of living because they may have debts or other obligations to pay. They may also outlive their money if they quit working too soon.

A little about net worth

Yesterday myself and several other bloggers discussed our net worth. Steve, the author of the blog Brip Blap, wrote an article explaining his thoughts on net worth. His take is that net worth is basically arbitrary. For the most part, I agree. Your net worth has a different meaning depending on where you live, your stage of life, how you determine your net worth, the type of assets that comprise your net worth (income generating assets, retirement funds, half a million acres of barren wasteland in the desert), etc. Knowing your net worth can be good if used as a checkpoint, or a motivational tool, but net worth cannot calculate your financial future, nor does it measure your great financial asset – the ability to generate income.

Your most valuable asset

When you consider net worth, it is also important to consider your earning potential, or the earning potential of your assets. Perhaps the best example is your job. Most people work 30-40 years before they retire, which is a little less than half the expected life span for most men in the US. When you stop to consider that almost half your life is spent working, you realize it pays exponential dividends to maximize your greatest asset.

Other income generating assets are extremely valuable to your total financial health. Some examples of income generating assets include rental properties, dividend paying equities, a side business, royalties, patents, annuities, pensions, and more. There are many ways to create alternative income streams and doing so can have an immediate and lasting effect on your financial health.

In fact, diversifying your income streams is much like diversifying your investment portfolio, and just as important. There are many financial factors that are out of your control. One cannot control the markets, inflation, gas prices, and other important financial matters. There is also the possibility of losing your job. Having a diversified income stream can help you weather some of these events.

Net worth is nice to know, if only to motivate you or keep you interested in having sound financial practices. But I believe the ability to create income is a more important indicator of your financial health.

Published or updated August 26, 2016.
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{ 23 comments… read them below or add one }

1 Emily

Great post! It’s so true about the ability to create income being a person’s biggest asset yet often times the least tapped one.

When hubby and I bought our first home, the bank did a calculation of his net worth and it was far higher than either of us would’ve thought and they explained that it was done by calculating earning potential instead of actual. Pretty interesting.


2 FourPillars

Guess what – I agree! πŸ™‚

Very good post.



3 plonkee

Just made me think, the biggest risk to all my income streams currently is losing the ability to use a computer. I’d find it both difficult to run my blog and keep my day job if I couldn’t type. I need to look seriously at ensuring I prevent RSI.



Excellent point. Your ability to earn (as opposed to ‘generate’) income is most people’s single greatest ‘asset.’ That’s why having adequate disability insurance is so important.


5 Mrs. Micah

That’s a nice way to look at it. Like plonkee, I should beware carpal tunnel and whatnot. But otherwise I consider myself fairly flexible in finding ways to create income…which I like. πŸ™‚


6 Laura

Something to consider is getting disability insurance. My friend developed CTS and it helped her through therapy.


7 fathersez

I second the motion. It’s not our careeer per se, but our own inate ability to create income, that is our greatest asset.

This is what we should nurture, protect, insure and improve.


8 Brip Blap

I agree with everyone – you’ve made an excellent point that I should have included in my post. Your education and career experience are “assets” and do have a value – the time and effort poured into them are “worth” as much as an investment in the market. Terrific way of looking at it. As Laura said, when you look at it this way disability insurance becomes really significant. I have life insurance out the wazoo but I’m probably under insured for disability. I would actually be curious how most people insure themselves against disability. I’m willing to bet almost every ‘earned income’ person is underinsured.


9 Ryan

Emily, I have heard of banks doing that, especially for younger professionals who have room to grow in the salary department.

Plonkee & Mrs. Micah, carpal tunnel can ruin a lot of people’s lives! So many people make their living with jobs that require typing!

KMC & Laura, I should probably look into disability insurance. I have a limited amount with my employer, but it only pays out a small amount and for a limited time. Thanks for the good comments.

Money Blue Book, even earning alternative income sometimes requires trading time for money. But you can often have more freedom and flexibility doing things on your own!

fathersez, I agree 100%. Continued training and education (formal or informal) can pay dividends.

Thanks for the comments everyone! πŸ™‚


10 Ryan

Steve, your assessments on equating education to an investment are spot on (the pf blog Free Money Finance often writes about this as well). For many people, it is the best investment they will ever make. And not just the initial 4 years of college, but any additional training, degrees, certificates, seminars, books read or anything else that improves your knowledge or life. I have some disability insurance, but as I mentioned earlier in the comments, probably not enough.


11 Pinyo

Excellent post, and that’s why I think alternative income streams, as well as disability insurance to replace your primary income are important.


12 Mark @ TheLocoMono

Interesting point, I always thought time was your greatest asset but now after reading this, you certainly have given me food for thought.


13 Ryan

Mark, Great point! Time is one of your biggest assets. But if you aren’t able to do anything with the time, then it doesn’t matter. Conversely, a 60 year graduating with a PhD probably missed out on his best earning years, even though technically he would now have a great ability to create income. (I know, extreme example). There is a balance involved. This is also one of the reasons why most career advisors recommend getting an MBA or other advanced degree in your late 20’s or early 30’s. So you can have time to take advantage of your earning potential.


14 Writer's Coin

Instead of working on our “careers” or getting that next promotion, I agree, our efforts should be placed into improving our abilities to generate income, be that by learning a new skill or learning to run a passive-income business on the side.

It’s why so many of us blog, right?


15 Art Dinkin

Very true!! And the younger you are, the more accurate your post.

I ask young clients all the time “What is the most valuable asset you have” and none of them answer “my ability to earn an income.”


16 Ryan

Writer’s coin, that is one of the reasons I blog. I also enjoy learning, sharing, and holding myself accountable. But, yes, earning a side income is one of the things I talk about doing to improve your own personal finance situation, so at least you know I practice what I preach! πŸ™‚


17 Ryan

Hi Art, I agree, time is a big factor when considering this. The longer you can earn an income, the longer you have to make that money work for you. Of course, I am only talking in financial terms. Health, religion, and your mind are all more valuable assets than money. πŸ˜‰


18 Dividends4Life

Ryan: Another excellent post! Thanks for sharing it. I plan to include your article in my weekly carnival review this Friday.

Best Wishes,


19 Ryan

Thank you for the compliment, D4L. πŸ™‚


20 Teaspoon

Enjoyed the post. ADding as one of my favorites from the Carnival of PF. I really like to review ric edeleman’s articles every now and then I find something that makes a new paradigm shift. He did this same topic from the point that you need to get your disability insurance before any other type of insurance … cause like you say, you’re protecting your most imporant asset! I never thought much about disability insurance until this concept hit me, aftetwards I’ve checked up my virtually free insuraance offered at work and learned more about the short term vs. long term disaibilty insuance. Definitely an eye opener, kudos on a great perspective. Morale of the story: Educate and insure yourself … you’re worth more than your weight in gold and maybe more! At 190lbs I’m worth at least $2,402,208.00 in gold πŸ™‚


21 Ryan

Hello Teaspoon, I never thought about being worth your weight in gold, but that’s a great comparison! I wholeheartedly agree about the disability insurance. I have a limited amount through my employer, but it is time for me to look at adding more. Thanks for the comment!


22 John

Interesting concept but really depends upon perspective. Net Worth bit I think needs testing as depends on what measurement you use to calculate. Another measure of net worth would simply be if income were zero then net worth is the time you have left until you have exhausted all assets. Fully agree that the more forms of income generating assets in your portfolio the better. Royalties and patents are difficult assets to obtain for the investor, I would love to stand corrected when I say this.!!


23 Ryan

John, yes it depends on perspective, as well as a few other factors such as age, retirement status, etc. Those in retirement may be able to live off their nest egg, which would then be more valuable than going out and earning more money.

For the stage of life I am in (around age 30), my ability to earn money is more valuable than the amount of money I have in the bank or retirement accounts.


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