There is endless debate about whether stocks, bonds or gold is the best investment but the answer may be staring you in the face - it is your job.

 

Simply put, a steady job and a good career will bring a lifetime of income.

 

Not only that, the job's value will also rise, in the form of increments and bonuses, making employment one of the best asset classes to hold.

 

Mr Christopher Tan, chief executive of financial advisory firm Providend, says the people he advises tend to focus mainly on investing their savings.

 

'They want to know what kinds of returns they can get, but often neglect the fact that income from their jobs is the best return,' he says.

 

 

Including a career as part of your financial assets is a relatively new concept.

 

A 2007 research report by a team led by Yale School of Management finance professor Roger Ibbotson studied the issue of the importance of 'human capital' in financial planning.

 

They argued that a working adult's earning power should be seen as part of his financial assets.

 

This human capital is at its highest when a person first gets a job, declines as he ages and is almost depleted by retirement.

 

So the income earned should be seen as a dividend on this human capital, according to the report entitled Lifetime Financial Advice: Human Capital, Asset Allocation, And Insurance.

 

'As our lives progress, we gradually use up the earning power of our human capital, but ideally we are continually saving some of these earnings and investing them in the financial markets,' it said.

 

'As our savings continue and we earn returns on our financial investments, our financial capital grows and becomes the dominant part of our total wealth.'

 

In other words, human capital becomes financial capital during a lifetime of work.

 

This idea may not seem too revolutionary in itself; after all, getting a well-paying job is uppermost on the minds of any young person.

 

But the idea takes on bigger significance once you recognise that the job is also part of your wealth and should be taken into account when planning investments.

 

The report suggests that traditional forms of financial planning, which do not take into account human capital as a financial asset, can be further refined with the new insights.

 

 

First, viewing jobs as a financial asset means an individual's risk is no longer confined to market risk, or risk that his stocks and shares fall in value.

 

Instead, you should also take into account the nature of your job and age when making investments and planning your finances.

 

The younger a person, the more risky he can afford to be. This is because while young, his human capital is not yet spent and his ability to earn is still high.

 

This is part of traditional financial planning, which looks at risk profiles based on a person's age.

But Prof Ibbotson argues that jobs should also be taken into account.

 

For instance, a teacher may be considered to have a low-risk job, much like a bond.

 

Thus, he may want to invest more in equities and alternative investments to raise his overall returns.

 

On the other hand, a banker, whose job may not be as stable or secure, may want to consider keeping a lower risk profile for his investments.

 

Noted the report: 'Individuals who work in careers that have earnings that are highly correlated with the stock market or the economy (for example, stockbrokers, commissioned sales people) should view their human capital as more equity-like and attempt to reduce their overall risk by holding more bonds in their financial portfolios.'

 

Mr Tan says this way of looking at risk is quite unique but it makes sense.

 

'I run a firm and it's quite risky. So I have always made sure that I have a backup in the form of my more conservative investments. I don't trade foreign exchange or dabble in exotic instruments such as options or derivatives,' he says.

 

 

Second, if careers are now seen as investments, taking care to develop and nurture them take on even more significance, says Mr David Ang, executive director of the Singapore Human Resources Institute.

 

Investing in your job and career to earn higher wage increases can pay huge returns over the span of a career.

 

Compare two individuals starting at 25 and earning $3,000 a month.

 

If the first person gets wage rises of 2 per cent a year, he would have earned a total of $1,799,801.19 by the time he turns 60.

 

If the second person gets rises of 4 per cent, the total sum earned would jump to $2,651,480.09 by 60.

That is almost a million dollars more over their course of a career.

 

The easiest way to invest would be to go for training, get different sets of skills and get better qualifications with a better degree, like a Master of Business Administration (MBA).

 

But investing in jobs and careers is not simply about putting down $100,000 for an MBA but more to do with becoming better at what you do, says Mr Ang.

 

'You will have to seriously calculate the costs and benefits of an MBA. Yes, it opens doors and gets you contacts, but what is its intrinsic value? You have to seriously consider the amount of value it can give you,' he says.

 

Adding value can also be through the form of adding a little extra to your daily work.

 

For instance, a security guard who goes around to patrol and does maintenance on a machine while on his rounds is adding value to his work.

 

Says Mr Ang: 'The employer sees this and will think this guy is worth that much more.'

 

 

Insurance also plays an important role in protecting against the risk of jobs being lost.

 

Income from work can suddenly dry up from death, permanent disability, or increasingly, partial disability, notes Mr Patrick Lim, director of financial advisory firm Promiseland.

 

'Insurance protects you against those risks and income from your job is something people depend on a lot,' he says.

 

He recommends whole-of-life plans as they not only protect the policyholder during his life but also bequeath a sum of money to the next generation.

 

Similarly, getting new skills that are not related entirely to your current career will also help reduce the risk of losing your job by being able to quickly re-enter the workforce in a different role.

 

Still, for human resource experts like Ms Annie Yap, taking too much of a financial approach to career planning may not be beneficial.

 

The managing director of human resource consultancy AYP Associates says this approach to human capital does give a useful lens to view one's career in the overall financial plan.

 

'But some things are not just about money. Whether you like your boss, job satisfaction and status are all intangible benefits of a particular job or career that cannot be quantified,' she says.