Human Capital

Todays BT carried an interesting article about "yourself" being the most important asset or human capital. Very often when we manage our financial portfolio we forget to include ourselves. Basically the type of career one is in determines the nature of future cash flows or earning stream, its certainty, consistency, growth potential etc. Thus we need to factor this into the overall financial management. In truth we have a bit more control of our human capital than stocks, commodities or real estates which are subject to market forces.

If I were to describe my previous job at the TLC which I worked in, I would have described myself as a bond, quite close to a Treasury. It gives steady coupon payment although the potential for growth is nothing much to shout about. It should have matured only upon me reaching the official retirement age (even as the tenure keeps lengthening). The chance for the issuer to call back is very very remote, even if I boo boo on my job. Given this risk free nature of my asset or human capital, I could  have taken much more risk in my other financial investments during my younger years.

The article went on to say "Your personal capital reserve and future earnings should drive your ability to make a change and not your portfolio return". I am trying to understand the context in which this statement is made. Personal capital reserve refers to your savings or inheritances etc. To determine your future earnings, the article says you have to be cognitive of your core strengths and competencies etc and ask relevant questions like 'What allows you to engage your human capital at the highest level?", "Where were you at your best?", "What was energising?" I think the writer is referring to mid career people who want a change, hence the need to explore one's true competency to maximise the return on one's human capital.

For the retirees however, other than reserves portfolio returns are major considerations which help determine how soon they can quit their job. Of the 3 questions, the more pertinent question may be "What was energising?" in order to identify the passion to enrich the last phase of life. So if you ask me what energises me most, I will tell you it is when I tell stories at the library, when I imitate the evil snigger of a wicked witch or the sob of a child lost in the woods; and when I spice my stories with jokes and humour. Returns on such competencies come in the form of chuckles at my own silly jokes or a remark from a grateful parent that her child looks forward to Friday because of storytelling. Haha how do I describe my human capital now?  Maybe it is like this S share that I still possess.  "China Milk" is suspended. The only return I ever get from this stock is a ridiculously colourful Annual Report that is shaped like a cow! It is so pretty and I still have it.