Build Your Career Assets

When we talk in terms of “assets”, we tend to think in terms of financial assets.

For example, an individual’s financial assets could be made up of, say, his stock holdings in Apple, the money he siphons away into a deposit account, and the gold coins he keeps secretly hidden under their bed. He may also try to leverage his career.

Some cash piles may grow strongly in value, some not so much. But the person knows that they represent an economic resource that he can put to use at a later date. This contributes to his “portfolio”.

But rather than viewing your portfolio purely in terms of financial assets or capital, how about factoring in human capital as well? This matters whether you’re working in New York, London, Hong Kong, wherever.

Human capital basically reflects your mix of knowledge, creativity and skills that can be used in the creation of economic value. That economic value can represent your employability. It can also reflect your ability to get promoted or to justify a pay rise. All of these play a role in future cash flow for you.

Suppose Mr. Smith has been saving and investing money for years and has built up a tidy sum in his portfolio. He looks at his investment statement and he’s very impressed indeed. From little acorns, mighty oaks grow.

But suppose Mr. Smith is a VCR engineer and has done that all his life and has no other formal training. Well, in that context his broader portfolio might not look so impressive. His ability to earn income in order to improve his financial health would likely be hurt over time by a structural decline in the industry he works in.

The same goes for banking. If you got into trading assuming that the good times would last forever, think again. Automation has changed that. As a result, this is an industry in decline and one where your human capital is decreasing.

Compare that with Miss. Brown, who is a teacher, or Mr. Jones, the nurse. Yes, they may certainly be underpaid in many instances but there will always be needs for those professions and the skills they have to offer.

So you need to find ways in which to stay relevant. So it can play a role in how to get a job.

But let’s face it, we’re in an era of skyrocketing university fees and graduates saddled with crushing student loan debt. University isn’t a viable option for many lower-income families.

But that doesn’t mean that investing in your future through education has to stop.

It simply means finding a route that gives you the best return on your investment (your time, money and energy). And that doesn’t matter whether it’s a Liberal Arts degree or a more vocational course. It’s all about what you get out of what you put in.

Whether we are talking about human capital or financial capital, it’s all about improving your quality of life in the future. So being a life-long learner can just as easily improve your worth in the same manner as putting your money to work at a young age and watching it compound.

So if you are looking for another way in which to protect your financial future think about your human capital. Factor that into the way that you look at your portfolio and your ability to grow it going forward.

Are your basic skills and industry (e.g. financial services) going to still be relevant in ten years’ time? Do you have the right transferable skills, such as public speaking?

Are you focusing so hard on earning and growing your money now that you’re not thinking about your ability to earn and grow money in the future?