When we talk about investment, we are basically talking about financial planning. It is important that we have to tackle financial planning first so that, hopefully, when it comes to retirement, we can financially independent and be able to do the things we want.
Tan Chin Hui, ex-vice president of a public-listed company turned successful network marketer, shared about investment in human capital in this video:
I know some of us are still on active income which comes from either employment (working for someone) or owning and running a business. I also know that everyone is looking for financial security and freedom, including myself. I was actually looking for passive income, financial security, and freedom.
To achieve those, let’s look at what a financial plan is. Financial plans have three key components which we’ll call the “3-Is.” These are: Insurance, Investment, and Inheritance.
First is insurance. Everyone buys insurance. I actually bought a few insurance policies. Insurance is used to assure the financial security of your family in the event of any dread diseases, disability, or death. So, Insurance is actually the minimal protection for us.
Second and the biggest one is Investment. Investments allow us to accumulate adequate funds for our retirement. Some of us actually do investment either in property, fixed deposit, or even in shares.
Lastly, we have Inheritance. Inheritance planning is to provide the management and distribution of your assets after death. This is done through wills and trusts.
When we talk about investment what normally comes first to mind are properties. The other things are: Share Market or Stock, Unit Trust, Bond, Insurance, and fixed deposit. There is one more thing that people have been thinking about, and that is human capital.
“Human Capital” is actually very new to some. I first heard about this in 1998. That’s many years back when I started my first career as audit manager. That time, I remember, was after the economic crisis/financial crisis were regulations have been actually drafted up and implemented.
They tried to define and put a value to “human capital” because at that time it was largely unreported in any company’s financial statement. Because of this, law regulation and Accounting standards came out to talk about and put a value to human capital.
Overall, human capital is very, very important to any organization. If you are currently working for someone, you are that company’s human capital. A lot of organizations, especially large organizations or multi-nationals corporation, invested thousands or even millions into human capital through education, development, and training. So, human capital is always a big deal in a company, even bigger than the fixed assets that a company has.
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