|Diversification - Investing, |
a photo by 401K on Flickr.
You might have one overall intention; however, it might be important or even critical to have more than route to get there.
In the world of investment, too much focus in one type of instrument is not necessarily a good thing. And the same may go with the careers in your household. If all of the proverbial eggs are in one basket and the basket tips over, the whole household can be in deep financial doo-doo. When two partners work in the same troubled industry or in the same company, it's possible that both incomes could be at risk at the same time.
Are you diversified? In your investing, have you arranged things so that some of your investments increase in value when others decline, just by virtue of the way in which the market works? Or have you at least established a portion of your portfolio that is low risk or even insured to retain its value, even if other instruments in your portfolio are selected to capitalize on rapid growth (when things are growing)?
Now let's touch back on your income sources. How much of your income relies upon you getting up in the morning and going out to do your job? What if you became ill or unable to get up and go out? Is there another wage-earner in the house? Are there other things that you could do if you were unable to meet your financial goals doing your current line of work? Are you willing to have a second job or consider a change if it means that you can more readily achieve your goals?
The challenge in doing more than one job or running more than one business at a time can be the potential for diluted energy or loss of focus on the factors that make either (or both) of your ventures work properly. If you are considering this route, however, think about the non-earning activities you're involved in that are consuming time and energy and not helping you meet your goals. Perhaps the focus that they are pulling right now could be shifted toward activities that could be in better alignment with your desired results.
The criteria for the best decision on focus versus diversification come from your goal of highest priority. Is it more important to you right now to have more time to spend with the kids or more income to fund family vacations and activities? It's said that too much work can make Jack a dull guy to hang out with. Perhaps that's true. But if Jack has a goal to buy a vacation home or pay off his college debt, diversifying and thereby increasing and/or securing his income stream might be exactly what would help Jack fulfill his most important intention.