Heard of the old adage “do not put all your eggs in one basket?” I was asked why my investments and income streams span across multiple mediums and disciplines.
Aside from the fact that I just have a diverse set of interests, I strongly believe in diversifying, whether investments in the stock market, real estate or building and establishing multiple streams of income elsewhere.
Although highly unlikely, the Internet may suddenly blow up, the local real estate market may dry up, or the city where the business exists in which I’ve invested may go bankrupt, anything can happen at any time. Diversifying is critical to hedge against unforeseen circumstances and maintain a balanced investment and business portfolio.
If you are going to work hard creating multiple passive streams of income so that you can own your own financial destiny and enjoy financial freedom instead of being at the mercy of your employer, why would you even take a chance of losing control of the life you have designed for yourself?
Today I urge you to revisit your portfolio and evaluate whether you are diversified enough to sustain the temporary ups and downs that any investor and business owner encounters throughout the lifespan of their investments and businesses.
If the answer is no, I urge you to learn about ways you can further diversify to reduce your exposure and maintain maximum balance. If you are strictly invested in the stock market, consider other options such as precious metals, real estate or investing in a small business locally.
Think about ways you can generate other streams of passive income relatively easily by duplicating previous efforts. For example, if you have a successful website online that generates passive income for you, replicate the formula and establish another website in another niche.
If you have a rental property that has been profitable for you, consider investing in another one in another city nearby. The key is to diversify, and one way to do that is by expanding. When one well dries up, you can count on the other to provide you with water.
Diversifying is not just for your stock market investment portfolio. It is for anything that involves risk, or exposure to unforeseen circumstances and uncertainty. So stay on the safe side and diversify your investments and income streams as much as you can.
Are you diversified enough to where you do not worry too much about your exposure?
I agree that one should be diversified, and ideally one’s skills should be transplantable and one shouldn’t be too overly reliant on one’s job. Reducing that reliance is probably one of the biggest benefits that you can get from diversifying your income streams.
Well said. I agree that over reliance on any one stream can be dangerous, no matter how secure we feel that stream is.
I’ve got a couple rentals which generate a couple thousand in net profit a month. However, with the discover of online income, I’m thinking of selling the rental properties in 5 years, and just focus on online.
So much more fun, with little to no overhead, and online income can easily shoot in the $10,000+/month!
Thoughts on rental property?
totally with you on this 100%. the advancements in technology and ease of use of platforms we have today make it indeed more fun, low to no cost and highly scalable.
that said, i am always bullish about rentals, good or bad times. if i can make money the day i buy it (positive cash flow), then appreciation is merely icing on the cake. it is a good hedge against the economy, and a physical/tangible asset in hands that you can smell, touch, see, feel. that is very important for many.
i too have thought about liquidating properties. i have reduced my rental portfolio gradually over the years. what is keeping you from selling all of them? is it the value you can get today (bad market)? do you manage yourself or through prop managers?
would love to hear more about your investing approach in rentals. how, what, when, where….any specific methods? also, mainly homes or condos / multis? i am assuming all in the west coast?
i have been talking to a few friends recently about taking periodic trips down to Michigan and buying rentals at 60%+ off. group trip outings sort off..
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Welcome to the blog and thanks for the generous comments Tom. Looking forward to interacting more.