Updated on 09.26.08

Looking at Your Career as an Investment

Trent Hamm

No Known Restrictions: Traders on the Floor of the New York Stock Exchange, 1936 (LOC) by pingnews.com on Flickr!Last night, I was leafing through the September 22 issue of BusinessWeek (one of the handful of magazines I subscribe to – a great read) when I came across an article by Lewis Braham entitled “The Missing Link in Your Portfolio? Your Job” (it’s titled differently in the online version, which I linked to).

The basic idea of the article is that a person’s career should make up a big part of their investment portfolio. Your career is human capital, after all, and it will pay huge dividends throughout your life. The article goes so far as to state that your career choice should directly affect how you invest and save for retirement (with my own emphasis added):

The problem is how to turn your career into something quantifiable that can fit into a plan. One suggestion from financial researcher Ibbotson Associates is to think of your job as a type of financial security. “Years ago we had a meeting at Ibbotson with all these legends of finance and Nobel prize winners, such as Harry Markowitz and Daniel Kahneman, in which we debated what kind of security the average person’s human capital is like,” says Thomas Idzorek, Ibbotson’s director of research. “We concluded it was like a junk bond. When times are good, it pays a stable income stream and trades like a bond. Then there’s a hiccup, and it becomes volatile and trades like a stock.”

To be more precise, Ibbotson judges the average person’s human capital to be 70% like a bond and 30% like a stock. “The human capital of a tenured university professor with a stable income may be more like a portfolio that is 80% bonds and 20% stocks,” Idzorek says. “Someone working in financial services, whose salary and bonus depend largely on the stock market, might be 50% bonds and 50% stocks.” All other things being equal, the tenured professor should be investing more aggressively than the stockbroker.

This idea makes a lot of sense. The more stable your career is, the more risky you can be with your investments. On the other hand, the more volatile your career is, the more stable your investments should be. That’s a great way to think about things, though it’s hard to quantify. From my perspective, the more volatile your career is, the larger your emergency fund should be – and that would be considered at least in part the cash portion of your investment portfolio.

But what really got me to thinking was the more general idea of looking at one’s career as an investment. I actually think of a career as being much more like an annuity than anything else. You put in a bunch of money and energy up front (and perhaps some contributions along the way) for something that pays out some amount of value consistently over a long period of time and may or may not still have some value at the end of the road. Let’s dig into this idea a little bit more.

The Initial Investment
College. Trade school. Apprenticeship. Internships. These are all initial investments that people make in their careers, and they come at a pretty stiff price. They cost you years of your productive life and often cost quite a bit of money as well (or at least not nearly as much income as you might earn elsewhere).

Your investment, though, is what you have to put in in order to get your career started, and the more energy and effort you invest at the start, the more likely it is that you’ll have a valuable career asset over the long haul.

Take school seriously and get good grades. It’s tempting to goof off in college – I certainly know I did plenty of it. I didn’t actually connect the value of an hour of studying to anything beyond maybe getting a somewhat better grade at the end of the semester, which often wasn’t enough initiative for me. However, studying really is an investment in your career that will pay dividends later on. There’s the direct sense that it will earn you better grades, first of all. Those better grades will pave your way into a better-paying job or into graduate school. But, even more important than that, diligent studying teaches you good habits and also builds up your knowledge capital. You have more information in your head, plus you’re skilled at acquiring more when you need it.

Build lots of connections along the way. Another valuable way to invest your time early in your career is to build strong connections with a diverse group of people. Get to know people in your area, but also reach out to people in related areas. If you’re in college, you can do this by getting involved in clubs and organizations related to your area of study, as well as general leadership organizations. Cement relationships with as many people as possible, doing regular social things with many of them and sharing your time and talents freely. This goes for fellow students as well as professors – include everyone.

Additional Investment Along the Way
Many people believe that once they get their foot in the door that they’ve achieved what they want – and they stagnate. They fail to look for opportunities to continue to invest in their careers, building up the value of that asset over time due to their own efforts.

The truth is that the people that really succeed and have amazing careers are the people that constantly invest in them, adding more and more value to their situation and to the people around them. Here’s how to do it.

Do your job effectively. You should take care of your job tasks, share your knowledge and skills easily with others, and take advantage of opportunities to stand out – make presentations, take on challenges, and so on. Be sure, though, that when you take on extra things, you don’t overload your plate – you should take advantage of those opportunities to hit home runs. One home run presentation will be remembered – four base hit presentations won’t.

Go beyond just doing your job. You should also look for opportunities to improve your own personal skills. Work towards further education on the evenings and weekends if you can, especially before children and other family responsibilities come along. Engage in social activities where you meet people who are also focused on succeeding – hanging out at the bar or goofing out with the guys won’t get you ahead. Each move you make in this direction is a further investment in your career.

Keep building relationships. Similarly, when you’re a young professional, get to know your peers both within and outside your organization (as well as people up the food chain and people in your community) and share your time and talents with them. The time spent discovering good people and focusing your efforts on building strong relationships with them is an investment that will pay time and time again.

Paying Out Dividends
So after all of this investing, how do things pay off? There are several things that you earn from building a strong career.

Strong income and benefits The most obvious benefit is a strong income and the benefits that come with it. If you build a strong career over a period of years, you will be rewarded with better pay and better financial benefits. This will help you to build whatever life you want and also support you into retirement.

Interesting work Eventually, with a strong focus on your career, you’ll be able to rise to the point where the work is exactly what you want to be doing. Maybe you’re an undergraduate student just entering school that has a passion for organometallic chemistry that you discovered through experiences in high school. Your career focus may be to eventually become an endowed professor at a university with the research materials available to study whatever you want – you’ve then reached the level where you can do the work you’re interested in and passionate about. A great job is a great payoff for hard work – a great job with great pay is even better.

Stable work If you’ve shown yourself to be a valuable asset, you’ll be a person that your organization will want to hold onto. A well-built career has inherent stability – you stand out above the crowd and are a person that not only is wanted by your own organization, but would be valued by many others in the industry.

Entrepreneurship possibilities Any successful worker with a lot of connections has a great opening to leap into entrepreneurship if the bug tickles them. This opens up all kinds of interesting possibilities.

Respect and leadership in the community A person who has worked hard building relationships with others, sharing what they know, and succeeding in their line of work will earn the respect and admiration of others and will often be turned to for leadership in the community.

It’s Never Too Late To Start Investing
Many people might read this and think, “That’s good advice for a person starting a career, but it doesn’t help me mid-career.” Don’t limit yourself in that way. Every day offers you an opportunity to invest in your career. Look into further education. Take on a challenge at work. Start building relationships with valuable coworkers. Learn about the procedures and work of the next rung on the ladder.

The choice is up to you. You can invest now and enjoy the dividends later or regret passing up that chance.

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  1. This is an intersting theory and one which I take very seriously.
    My problem is that I have done such a great job “investing in my career”, tripling my salary over the past 4 years but it comes at the expense of not really enjoying the job.
    I don’t like commuting to work in a suit and tie each day, but the longer I stay the more successful I am at it and the harder it is to walk away and do something I might enjoy more.

  2. Jaymo says:

    Outstanding article Trent. I’m an enormous fan of this philosophy – extract the maximum ammount of goodness from your career (heck any JOB…any action, really) and apply it to the future you. Thank you good sire.

  3. Eric says:

    Wow. Just…wow. Thank you. This post is, to use the baseball analogy you used in the post itself, a 9th inning, game winning home run blast to the upper deck!

  4. Rob says:

    Thanks for the motivational boost, Trent. I’m just starting my second year of part-time law school (four year evening program) while working full-time having just turned 34. There are moments where the end seems so far off, but it’s good to be reminded of the forest for the trees. One point I would add to the “Additional Investments” section is persistence. There’s a lot of “hunkering down” that needs to be done as these investments usually take some time to mature. Great article.

  5. harry says:

    This is great! I’m in college and it’s always good to get reminded that things ARE an investment, it’s up to ourselves to make the most of everything.

  6. I think this is the hardest thing to do in your post:
    “Take school seriously and get good grades. It’s tempting to goof off in college”

    You don’t realize at the age of 18 or 19 how your decisions of a major will make an impact on your life. College or four or five years but you don’t retire for 40 plus years.

  7. Your Friendly Neighborhood Computer Guy says:

    Great concept! I think the most important point here in the networking aspect. The group of folks you know are the ones that will be able to push for you to get that promotion, or find you a job if you loose your current one. Plus, having a good relaitonship with your coworkers just makes work a better place to be.

  8. Kevin says:

    Very interesting take and timely for me since I had my annual review yesterday. I like the 70% bond/30% stock analogy in the green box above, I never though of it that way.

  9. Debbie M says:

    Tyler, if you can save a lot of your extra money, you can use it to help finance a move to a more fun job later. Doing things like building up a big retirement fund and paying off a house while keeping expenses relatively low can go a long way toward taking off the pressure in the future.


    I am already doing the strategy of investing my money with a different risk than my job. My job is probably 95% bond (state job), and all my long-term savings (except my mortgage) are in stocks. But I can imagine that people who are attracted to “safe” jobs are also attracted to “safe” investments and vice versa.

  10. Paul says:

    Just wanted to let you know that this article, and this type of article, are what I really enjoy about TSD. You take what some see as difficult concepts and apply them to real world situations. Well done.

  11. Lurker Carl says:

    Investing in a career, never thought about it quite like that. It sure sounds nicer than trying to get a better job! Mid-career is probably the best place to invest as most folks have figured out their interests and abilities by then. Might as well get paid to excel in what you like best.

  12. Lynn says:

    I’m wondering now if my toying with a mid-career change is like the dip in the markets happening now. I’m [almost] 37, earning decent income, but currently in the process of doing due-diligence in deciding whether to completely change careers…which would greatly reduce my income for about 4-5 years if I go forward with it. On the other hand, I could be doing something I would enjoy much more.

  13. Jessica says:

    Great post. I have been thinking about this a lot lately as I am in my senior year at a university and getting ready to apply to law school. I’ve really buckled down and have been taking more time to study in order to raise my GPA, as well as study HARD for the LSAT, so I will be more competitive for admission to the law school of my choice and scholarships. Hard work in my undergrad secured me scholarships so I will earn my BS in Political Science debt free! I’ve been working for a prominent local attorney for 4 years learning anything I can to help me in law school and have been making some great connections along the way. I’m also meeting other important individuals in the community (elected officials, business owners, civil servants, people of trades, the list goes on). This has already helped me tremendously and I’m not even done with school yet. I can’t wait to see how things go when I’m ready to start practicing law! I love TSD, keep up the great work! :)

  14. rebel says:

    This article is really a wake up call for me. My career is in IT. It is a very stable career path as there are opportunities everywhere. However, it is a changing career and I need to do more to stay ahead of the curve.

  15. GettingThere says:

    OK — I’m going to be the pig at the party. Yes, this is an interesting post with some good ideas. At the same time, it was clear to me that this was written by a young man early in his career, intent on “getting it right.”

    This whole post just seemed sort of grim and grinding. My advice from a few years farther down the road — lighten up a little. Money is about security; life is about relationships. It’s a mistake to focus so hard on the former that you sacrifice the latter.

    When I went to college, my father told me that 75% of my education would come from my classmates, and he was right. I didn’t join clubs to get ahead; I joined clubs that interested me. I didn’t make connections with everyone; I formed deep and lasting relationships with a smaller group of diverse people with whom I’ve continued to share my life.

    In my work, the joy has come partially from successful outcomes, but far more from being part of a good community of people who care about one another. A consulting firm I worked for still has reunions, some 15 years after the firm folded, and they’re always packed. Why? Because we liked each other then and we like each other now. Nobody remembers whether I gave home run presentations; they remember that I’m reasonably bright; good to work with and fun to have around.

    There is a minimum threshold of performance — once you’re known to be “good at your job” it is relationships that make the rest of the difference. It’s also relationships which make the worth fun or, when they go wrong, awful.

    Life is going to toss everything upside down more than once in your life. It’s OK. You’ll survive. Be agile, be open and know that as long as you’ve got folks who care about you, you’re the only sort of success that matters.

    Yes, you should work hard. Yes, you should consider your work an investment and search out the highest ROI. Just remember that the most valuable return isn’t always about money.

  16. Aggie says:


    you have talked before about college education not being a great investment and I read this interesting article on how college is *not* worth a million dollars in the lifetime of a graduate.

    I think there is some middle way about it, because now that I have a real career, I cherish it very much. It has been a wonderful investment and has given me freedom I never had before. Without my education, I wouldn’t have a worthwhile career. I’d love to see you do more investigating on this idea.


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