If you are looking for advice on how to invest your money, you might have come across some common rules of thumb, such as allocating a certain percentage of your portfolio to stocks and bonds based on your age or risk tolerance. But have you ever considered how your job and the industry you work in might influence your investing decisions?

Your career is not just a source of income, but also a form of wealth that can change over time depending on various factors, such as the performance of your industry, the demand for your skills, and the interest rate environment. Therefore, it makes sense to adjust your asset allocation to account for the risks and opportunities that your job entails.

For example, if you work in a cyclical industry that is highly sensitive to economic fluctuations, such as mining or construction, you might want to have a more conservative portfolio that can cushion the impact of a downturn. On the other hand, if you work in a stable industry that is less affected by market swings, such as health care or education, you might be able to afford a more aggressive portfolio that can capture higher returns.

But how do you know which asset classes are more or less correlated with your industry? A 2015 paper by David M. Blanchett and Philip U. Straehl analyzed the relationship between asset class returns and changes in human capital (i.e. wages, growth, etc.) across different industries from 1993 to 2013. They found that some asset classes, such as intermediate and long-term U.S. bonds, high-yield bonds, and REITs, had higher correlations with industry-specific human capital changes than others, such as U.S. and international stocks, TIPS, and commodities.

Using this data, they also calculated the optimal portfolio for each industry, taking into account the human capital changes as well as the expected returns and risks of each asset class. The results showed that the optimal portfolio varied significantly across industries, suggesting that there is no one-size-fits-all solution for investing.

Of course, these results are based on historical data and may not reflect the future performance of different asset classes and industries. Moreover, your asset allocation should also depend on your personal goals, time horizon, and preferences, not just your job. However, this research does provide some useful insights and guidelines for how to think about your portfolio in relation to your career.

For instance, I work in the financial industry, which means that my income, equity, and book royalties are all tied to the stock market in some way. This makes me overexposed to the stock market risk, so I decided to reduce my stock allocation in my taxable brokerage account and shift some of it to U.S. Treasury bills, which are less correlated with the stock market. This way, I can diversify my sources of wealth and prepare for different scenarios.

You don’t have to follow my example, but you should at least ask yourself whether your current asset allocation is right for you, given your job and the industry you work in. By doing so, you might be able to improve your investing strategy and achieve your financial goals more efficiently.