List some of the types of risks to human assets and briefly explain how to reduce them.

Question 1:

From Ch. 11.   List some of the types of risks to human assets and briefly explain how to reduce them.

Student 1:

Human assets, also referred to as human capital is an intangible asset   It can be classified as the economic value of a worker’s experience and skills. It includes assets like education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.

There are risks to human assets. And there are some possible ways to migrate the risks. First of all, there is a threat to the human itself. He can use diet, exercises, stress management to reduce the risk. In case of illness, he can buy medical insurance, public and private disability insurance to reduce the risk. In case of early death, of course, life insurance, diet, exercises will reduce the risk, while in case of extra long life, he can use precautionary savings, social security, government Medicare and private medical insurance to reduce the risk. There is the risk of lower income and layoffs. In this case, he can save up his precautionary savings, use the government unemployment benefits and find another job to secure household earnings.

There are also a few human assets related risks, for example, the integrity of the personal assets. In this case, he can diversify his retirement savings and buy inflation protected securities.


Altfest, L., (2017), Personal Financial Planning, 2nd ed. McGraw-Hill.

Human capital. Retrieved from 

Question 2:

From Ch. 10.  What kinds of investments are best suited to saving for the down payment on a house to be made in three years? Explain.

Student 2:

There’s multiple forms of investments that would be suitable for saving for a down payment on a house in three years time. The investments would be mutual funds, bonds, and conservative stocks. Personally, I wouldn’t choose conservative stocks just because even if investment professionals deem the stocks safe, you truly never know what could happen. Look at what happened back in March at the beginning of COVID, I’m sure most people didn’t see the crash that took place coming. However, I think mutual funds and bonds are both perfectly fine options. Mutual funds investment decisions are made by the shareholders and aim to keep a diversified portfolio, while still being professionally managed. This is a nice and fairly safe option to save your money while most likely receiving a nice return back as well. Bonds are a nice and most likely safer option than mutual funds. Bonds are basically a loan to a government, usually at a predetermined length of time, where if you cash it in you will receive what you paid back with interest. As long as the bond is with a creditworthy government or association, bonds are known to be super safe. If you’re able to get bonds in 1, 2, or 3 year increments, I would say bonds would be my choice for saving for the down payment.


Rosenberg, Eric. “Saving for a Down Payment: Where Should I Keep My Money?” Investopedia, Investopedia, 28 Aug. 2020,

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