What am I worth?
Well, I've got a few assets
and to be honest, more than a few debts.
Most people say that to calculate your net worth,
you should add up those assets
and then subtract those debts.
But that really doesn't show the whole picture.
The thought of having a net worth above zero
when you're just starting out,
maybe you've got student loans and very little income
might sound ridiculous and I understand
because I'm very young and cool too.
But even if you don't have a lot of money to invest
you can still invest in...
Wait, is it really that corny?
Yeah.
You can still invest in yourself
or to put it better, you can invest in your human capital.
With Suzanne Woolley of Bloomberg Wealth.
Thank you so much for being on Good Money.
Can you explain to me what human capital is.
Human capital is basically our potential.
You may feel first starting out
that you don't have a lot of money,
maybe you have student debt.
You feel like you're not very rich in assets.
But the fact is that here's another corny line for you,
like you are your biggest asset.
You have years of earning potential.
So you may not have a lot of money in the bank
but your potential at that point is huge.
So you're actually rich in that respect
even though you may feel sort of everyday poor.
Can you explain to me the ways
in which human and financial capital sort of converge
as our lifetime goes by?
So when you just start out,
you have untapped human capital.
You have huge earnings potential for decades and decades,
but you don't have a lot of financial capital.
Going through life you are building your financial capital.
You're also building your human capital.
But say at age 55 or so,
you may be in your peak earning years.
So when you look out down the road, you know, 20, 30 years,
your earning potential is not that huge.
But by this point you probably have a lot
of financial capital.
You've saved in your retirement savings program.
Maybe you have other outside savings.
So at this point your financial capital
might be a little bit ahead of your human capital, say.
And that's pretty much sort of as it should be.
So how can I invest in my human capital?
What actions can I take to make the most impact?
Your ability to earn an income
is one of your greatest assets.
Oh!Hi. Who are you?
I'm Mary Beth Storjohann.
I'm a certified financial planner.
Oh, well, thanks for coming on the show.
How is my career one of my biggest assets?
That salary that you're bringing in,
the employer benefits, there is so much
that can add to your net worth over time
which is why you need to really nurture your career
to make sure you're extracting everything you can out of it.
What are some steps I can take to nurture my career?
The basic ones that we all know about
are those promotions, the salary increases,
and, you know asking for increased responsibility
at your job.
The big thing that was misconstrued
especially for young people
is those only come around so often.
You can actually drive that process as well.
Oftentimes many people are waiting to be recognized.
You're waiting for that annual review.
You're waiting for your boss or somebody
to recognize your work or the good things that you're doing.
And so the biggest thing that we can do
as young people is really take your career by the reins
and think and make a plan for yourself.
You wanna communicate with your boss and your supervisor
to make sure you're clear number one
on what you can do to advance your position in your role.
You can set your own career growth goals.
And really you can drive that process
of meeting with your supervisor.
You might not get that raise
every quarter, every six months,
but you can still have goals and check in to make sure
that you're clear or how are you tracking?
Are you doing the right things?
Are you on track for the raise
or the promotion that you are seeking out?
And you're getting that feedback line.
That feedback loop does not need to be once a year.
The goals don't really work
if we're only checking in on them once a year.
So beyond those six month check-ins
and making sure that I'm on the right track
what else can I do on my own time to build my human capital?
So, a couple of things,
one, I like to say focused on education.
So you can sign up for online courses covering any topic
that you're interested in.
So for example, if you're marketing, social media marketing,
how to use industry specific software,
ways to improve your leadership skills.
So there's ways that you can actually round out yourself
as a manager and a leader as well.
A lot of the times we're focusing
just on like the on the technical skills
but there's some softer skills that we need
as managers and leaders in advancing the growth ladder.
Another one is checking in with your employer
on if they fund or offer
any continuing education opportunities.
Will they actually pay for you to go
and take any of those classes or courses
to advance yourself is another one and then certifications.
So depending on your industry there's, I'm sure
a variety of designations or specialties or certifications
that you can get and you can seek those out on your own.
So what if I feel stuck?
Like I'm at a dead end in my current job.
You're feeling stuck in your current position at work.
One of the things that I usually say
is go back and take stock of like,
what are your career growth goals?
Are you in an industry that you enjoy?
Is it something that you want to continue to pursue?
And I think the biggest thing
is don't be afraid to to jump.
If you wanna go in for one last push,
I like to say build a career reverse buckets.
What are all of the things that you've accomplished
in your job that you're currently in?
If you wanna go in for one last push
or there were kind of like conversation
around negotiating or growth.
And if it doesn't work out, look for another job.
If you're feeling stuck, nobody says you have to stay.
Thanks so much Mary Beth for stopping by.
So hypothetically I get to the point in my career
where I can start investing some actual financial capital
but how should I invest that based on the type of career
that I have?
William Bernstein Bill, thank you so much
for joining us on Good Money.
Could you just really quickly introduce yourself
and say what it is that you do?
I'm a recovering neurologist.
I have a practice for 15 years.
I write about finance.
I write about economic technological history.
I do have an investment advisory firm
that I co-founded with a lady named Susan Sharon,
Efficient Frontier Advisors.
And that's in a nutshell, I guess.
Let me ask you, based on their careers,
what should people be thinking
about how they should invest their money?
You have to ask yourself, is your job a bond,
or is it a stock or a lottery ticket?
How are you risky as your human capital?
And so if your human capital is not very risky,
if you're that tenured professor
or a government employee, you can afford
to take lots of stock market risk.
But if you're working in the financial services industry,
you're already invested, your job
has already invested in the stock market.
So maybe you wanna take a lot less risk
in your investment portfolio.
If you look at your total capital, okay,
your investment capital plus your human capital
when you're very young
your human capital overwhelms your investment capital.
So, there's nothing wrong with taking a lot of risks
particularly if you have a relatively secure job.
So if you have a job that's a bond,
you have a nice secure teaching position
or government position or a reasonably secure job
in your industry with good employment prospects
no matter where you are, then essentially you have a lot
of bombed capital on the human side.
So there's no reason why you can't go whole hog
and invest all of your investment capital
when you're young in stocks.
And at least the theory says, that's what you should do.
The problem with that comes on me emotional side,
which is there are very few people,
see are very few sentient beings in this quadrant
of the galaxy that can tolerate an all stock portfolio
when they're 25 years old.
Let's say that you have a more freewheeling career,
what kind of safe things should you
be putting your money in?
The classic riskless asset, right, is of course a T bill.
It's perfectly reasonably safe.
The government can always print money to pay you back.
There's no credit risk or almost no credit risk.
And there's almost no duration risk either.
In terms of the last few decades
what has changed about what jobs are bonds stocks
and has that gotten worse or better, I suppose?
Oh, much worse.
You know, we're living in libertarian heaven right now
where no one has...
You know fewer and fewer people have job security.
I mean, you're a journalist,
I don't have to tell you about that.
So there are far fewer bond-like jobs out there
and a whole lot of jobs
that are more like really bad lottery tickets.
Yeah. So maybe my career is more of a lottery ticket.
I hope it hits.