If you’ve ever listened to those fancy financial guru’s discuss investing, you’ve heard the advice about having a well diversified investment portfolio.
Of course very few American’s are actually investing to implement this strategy. But the idea behind it is solid financial advice.
It basically means, don’t invest all of your money in one thing. Don’t make all of your investments be in a particular company, or industry, or type of stock. Rather spread your investing dollars around into several different types of investments.
This is done in investing to protect you from losing all of your money should a company go out of business or new legislation is passed that impacts an industry.
Even though few American’s are in a position to invest their money into the stock market or other financial investments, most Americans do make a different type of investment every day.
Each day you invest your time in exchange for an income. It’s probably one of the most valuable investments you’ll make. After all, your income is the most powerful financial tool you have at your disposal to build wealth.
Yet the vast majority of us have zero income diversification. We go to work, invest 40 hours a week of our time, receive our compensation and go home. Then when disaster strikes in the form of a layoff, termination, or company downsizing we have nothing.
If you’re investing your time in exchange for an income then implementing sound investment advice should be a top priority.
When you recognize that we’re all self employed, you recognize that you must maximize the amount of income you can make when you invest your time. That means having only one source of income is dangerous.
I’m not saying you can’t have a primary source of income. I’m just saying if all you have is one way you earn money each month you’re playing a risky game.
This is what most successful businesses do.
Take Apple Computers for example. The iPhone is by far their most successful product and revenue driver. However they have a full product line that produces revenue of its own. If a competitor came in and stole 100% of the smart phone market away from Apple, they wouldn’t collapse as a company. Sure, it’d hurt. But they wouldn’t go out of business.
Do you mow your own lawn on the weekends? How difficult would it be to ask 2 or 3 neighbors around you, that already have lawn services, if you could do it instead? You may have to invest an extra hour on Saturday mornings but you’ll earn an extra $300/month.
Do you have knowledge that other people would want to learn? Could you start teaching a class? Are you in construction? Maybe you can earn referral fees when you refer out different contractors.
There are tons of ways to diversify your income and it’s one of the smartest things you can do for your finances.
What are some other ways you can diversify your income? Tell me your ideas in the comments.