The Biggest Asset You Have

We finance nerds spend a lot of time thinking about investments. Constantly watching the markets and checking our brokerage account. Overanalyzing this, over-optimizing that. All to squeeze out a few basis points. There's some value here of course but our energy is largely misplaced. Your portfolio should take a backseat to your biggest asset, you.

Human capital - the value of all your future earnings. Your economic power. Far more important than any portfolio decision. You're the cash cow, invest your energy accordingly. The more you invest in yourself, the greater your financial potential.

Keep learning. Education is the greatest predictor of wealth. College graduates makes a median $30k more a year than high school graduates. Huge for a single year, life-changing over a career. The chasm grows even wider for those who up-skill post-graduation. Learning makes you valuable.

Focus on your career. Invest in a career (or build a business) that is financially rewarding and something you can do for the long-term. This is your greatest cash flow, portfolio returns don't even come close.

Build relationships. Invest in strong relationships. This pays off everywhere.

Get healthy. Nothing matters without health. The rewards above all come from compound interest. You need to stay in the game in order to reap the benefits.

It's easy to get lost in the finance sauce. Remember what your biggest asset is and prioritize it.

Happy new year, friends.

Comments

Today's Special: Humble Pie

You champion a project, fight for an idea, and then...reality sets in. That churning in your stomach isn't butterflies, it's the realization you've missed the mark. Pride will puff up your chest, and kick in the "defend at all costs" instinct. But arguing with the umpire never changed a call. Admitting you're wrong isn't a sign of weakness. It can strengthen your professional standing. In a world obsessed with the illusion of infallibility, the courage to adjust course is a breath of fresh air. It shows you're confident enough to be wrong, and adaptable enough to learn from it. Do your research, think critically, and stand behind your decisions. But when the data whispers (or screams) otherwise, don't be afraid to swallow that slice of humble pie. Be the first to acknowledge. Don't wait for someone to point out your mistake. Be open, take responsibility, and most importantly, focus on what you're going to do to address it. Don't dwell ...

The Art of Giving Feedback

Constructive feedback is an awkward affair. You don't want hurt feelings, but recognize the importance of honesty. You've tried the classic "hoping things will get better on its own" and unfortunately it hasn't played out. When giving feedback, here are a few things that I try to keep it mind. Start with empathy. Step into their shoes and understand their story. If you don't know, ask. Be genuinely curious. Feedback is a dynamic affair. Shared communication with a shared goal towards progress. Take the emotion out of it. Focus on the situation, not the person. Focusing on the person adds unnecessary weight to an already emotionally-bloated event. Be specific. Give clear examples. Vague feedback equals dismissed feedback. Doing above won't de-awkward things fully, but it will dampen it and increase the chance of better outcomes.

Negative Feedback, Positive Lessons

In the battle against plastic bags, a five-cent tax was shown to be much more successful at deterring usage than a five-cent credit for bringing your own bags. Carrots satisfy but sticks sting, and they sting hard. So we default to the less painful choice of avoiding loss. Loss aversion impacts the way we process information. A 2019 study invited participants to learn through a series of multiple choice questions. Each question only had two options to choose from. Whether guessing correctly or not, they would still learn the right answer. Despite the identical learning opportunity, participants were much more successful at recalling the answers they guessed correctly than those they got wrong. "You're right!" feels good. We savour the moment, analyzing every detail. "You're wrong!" stings. We want to quickly forget, dismiss, and move on. When we succumb to loss aversion, we miss opportunities to learn. Failure is part of the process. We'll experie...

Herman Ye

Search