With 2 weeks left in the MBA program, my year at INSEAD is quickly coming to an end. Not being especially nostalgic, I already have one foot out the door. I’m ready to move on. I booked a flight to leave France early, so I will miss the graduation ceremony that INSEAD chose to convene in a Big Top Circus tent that has been erected in the parking lot. (If the Dean is reading this, please find a more glamorous venue for next year!)
If there’s one realization that I’ve had lately, it’s been how expensive my year has been. When you take your post-INSEAD salary, deduct the cost of rent and loan repayments from your net after-tax income, the numbers can be scary. The luckiest few are those headed to tax-free countries in the Gulf. Those of us who will work in the developed world, will be happy to finish each month with a few dollars in our bank accounts.
A classmate asked me why I felt the need to leave early and start working. “Loss mitigation”, was my answer. I’m keen on changing that negative sign on my personal balance sheet, to a positive sign. Yes some will argue that my INSEAD MBA is a revenue generating asset, blah! blah, blah!, but unfortunately no mortagage bank is willing to securitize it, to help me buy a house. I will need a $40,000 to $80,000 cash downpayment for that.
In a recent Career Services panel, a recruiter from a leading global headhunting firm observed that MBAs are often surprisingly naive about their own personal finances and career development. I’ve gone 9 months without a salary, since my last paycheck in September 2007. High up on my action list are starting work, maximizing my pension contributions for 2008, and repaying my debt. If I had taken my $107,000 USD opportunity cost of coming to INSEAD, and invested it in a global stock index fund earning an average 6% net inflation-adjusted return, I would have saved $822,411.29 at retirement in 35 years from now. This would have translated into a $41,120.56 annual retirement annuity payment, in constant 2007 dollars. I am however optimistic that I can recoup my opportunity cost in after-tax dollars in a short enough time frame to render the present value of my INSEAD investment positive.
But part of that optimism means making smart choices. Vacation will have to wait until the holidays, next December. Why take one now, when I can earn a full salary while using my vacation time? My year at INSEAD has been one long vacation. A costly, stressful roller coaster, yet a rewarding vacation. And now I am eager to finish my remaining school assignments, get back to the real world, and start using the skills I learned here at INSEAD.