Human Capital to Financial Capital Graph

CFA Level III Portfolio Management
#1

Maybe this is more for the water-cooler forum but I thought I would share an interesting perspective on exhibit 3 in reading 12 asset allocation. The exhibit covers the amount of human capital vs financial capital during a person’s life. What I thought was interesting is that the chart helps figure out the old idiom of when a person is worth more dead than alive.

Glad I work with investments and not actuarial science so I don’t have to think through these philosophical questions as often.

I would find it interesting if there was a study done of the amount of human capital versus financial capital of different generations or different professions. Attorneys and doctors versus skilled labor. How much liabilities and risk would a person take on to get rewarded with financial capital. Or maybe there is even an equation at the macro level for Expected Financial Capital as a function of human capital, risk, opportunity, and intelligence. Or is it that financial capital is a function of human capital and opportunity; And that human capital is a function of individual traits like intelligence and risk taking.

#2

Yesterday I was watching Joker on a domestic flight and the quote of his on the joke journal struck me “I wish my death makes more cents than my life”. Should he have talked to a CFA rather than the city service, none of that might have happened.

#3

My dad passed away last year. He was long retired, but still had a small group term policy. The proceeds were more than enough to pay for the funeral and associated expenses with a little left over. It wasn’t so much about the human capital to replace, but about giving us one less thing to worry about at a bad time.

N.B. I am an old life and annuity actuary, so yes, life insurance and annuities have a special place in my heart!