Evaluate how a person's financial choices respond as their economic net worth, and its split between human and financial capital, changes through life's financial stages

Human capital is the present value of expected future earnings, discounted at a rate that rises with occupational risk. Financial capital is accumulated savings and investments, and economic net worth combines the two with other assets less liabilities. Early in life, human capital dominates and financial capital is small; during working years, saving converts human capital into financial capital; at retirement, human capital is near zero and the portfolio must fund consumption. Decisions follow: young people with secure earnings can take more portfolio risk and may need life insurance, while retirees need income, longevity protection and stability. A trap is judging risk capacity from financial assets alone; a large, stable human capital raises it.