Your Greatest Asset is The Ability to Create Income

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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…

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.

Nurture Your Most Valuable Asset

Several years ago, I was talking to a coworker about our career and life aspirations. He was a couple of years ahead of me in the workforce, and we were in a similar stage of our lives. We talked about the obvious – be happy with our families, get promoted and be successful in the workforce, earn enough to be financially stable, have a nice house, and so on. We also talked about how we plan on doing some of these things.

One of the things we both discussed was getting our Masters Degree. My goal was to start an MBA program. Being a military veteran, I am blessed that I have earned the eligibility to use the Montgomery GI Bill (or Post-9/11 GI Bill), which will pay for most of my MBA depending, on where I attend. I realize that is a great advantage, and as I said, I am blessed!

My friend, however, does not have the MGIB. He expressed his desire to get an MBA or other Masters Degree, but said he would wait until he could afford it. I don’t know his exact financial situation, but based on his career and life goals, this is an investment he couldn’t afford to skip.

Investing in oneself is the best investment anyone can make, and education is a great way to do just that. An Associates, Bachelors, Masters, or Doctorate Degree are all attainable and will help most people in their career progression. There are other forms of education as well – apprenticeships, certifications, on the job training, etc. You don’t need a formal education – but you do need skills.

The point I am making is this – no one will hand you everything, you must work for it. Increasing your education is just one way to help you achieve your goals.

Now more about my coworker… He is in his late twenties, drives a late model BMW, wears designer suits and shirts, takes an annual cruise, has a huge flatscreen TV with the full digital TV package… Do you see where I am going with this? He has already made his investment choice.

Related – Most valuable college degrees.



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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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  1. Ryan says

    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!

  2. John says

    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.!!

    • Ryan says

      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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