Comments on: Factoring Your Job into Asset Allocation

By: kenyantykoon

kenyantykoon — Tue, 27 Oct 2009 06:47:52 +0000

this makes sense. get some security brought by regular income. i think this is also important to people with a high risk tolerance but more so the conservative risk averse investor

By: Financial Samurai

Financial Samurai — Mon, 26 Oct 2009 18:38:23 +0000

This is a key topic Ritu, thnx for highlighting.

Everybody should do a discounted cash flow analysis, or future cash flow analysis on their income stream.

Being able to work and produce income is BY FAR our #1 asset.

By: Sally

Sally — Mon, 26 Oct 2009 17:10:43 +0000

This is something I haven’t heard of but it makes so much sense! I have a pretty stable source of income, and I should be more aggressive with my investments.

By: Jane

Jane — Mon, 26 Oct 2009 16:44:02 +0000

Hi Ritu,
Great post.

I’d heard that spouses should have jobs in different fields to be diversified in case one field tanks. You put another twist in diversifying a person’s job with their investments. Thanks. Look forward to hearing more from you.

David: You have a knack for picking great guest contributors!!

By: MoneyNing

MoneyNing — Mon, 26 Oct 2009 16:37:13 +0000

Considering that our job is the number one funding source of our savings and the fact that savings is the most reliable and controllable aspect of wealth creation, I would argue that it’s one of the most, if not the most important consideration asset when it comes to personal finance!

By: Ritu Agrawal

Ritu Agrawal — Mon, 26 Oct 2009 16:15:35 +0000

Right, it helps to be realistic about your job both ways. There are many former investment bankers out there who started out with 6 figure salaries and enormous signing bonuses after graduation, but then saw their companies take a hit. Many lost their jobs. It’s easier said than done, but understanding the volatility of your industry is really very important.

By: Daniel @ Sweating The Big Stuff

Daniel @ Sweating The Big Stuff — Mon, 26 Oct 2009 14:30:49 +0000

I only recently realized that your job is part of asset allocation. When tlaking to my father about his work and his savings, at first it seemed that he wasn’t doing enough to protect himself. He seemed unworried that he might lose his source of income. I quickly realized why: there was little to no chance of that happening. If anything, he had started working privately 2 days a week, so he would still have something to fall back on, even in the most extreme case of emergency. So while he may not have the largest emergency fund, he is in a great position, and the “standard rules” don’t apply to him as much as they would to someone in a different profession.

By: Miranda

Miranda — Mon, 26 Oct 2009 12:48:02 +0000

So often we forget to consider what we do as a career as one of our assets. But it really is an important consideration.