1 Income is not enough
Posted by Matt M on August 11, 2008
They say that the #1 rule in investing is to diversify or the more trendy term was proper asset allocation. The basic theory goes is not to have all your investment eggs in one basket (ie: the tech sector relating to stocks). Really in the investing arena you should be diversified amongst several types of investments as well as investment classes, each one carrying its own risk/reward/comfort model.
Well this got me thinking that in today’s 21st Century economy one should not only be diversified with their investments but with their income as well. People, who are only working their 9-5 daytime job and that it, have all their income eggs in one basket. So when their sector of the economy takes a turn for the worse where will they be?
We learned about this diversification in Los Angeles in the early 1980s where the high desert had the aerospace industry and the basin had filmmaking and music (essentially Hollywood). When those industries left or took a downturn the entire area suffered. Since then the Southland has done quite well in diversifying where, how and when the economy feeds itself, in other words gets paid.
I think each individual can take a lesson from the Southland’s previous downturn and subsequent recovery. If someone were to lose their only source of income, where will they be? To make matters worse what if that worker has mouths to feed? Then the only source of income to sustain life has now been taken away, so what’s Plan B? Plan B should be your part time business that you are now ready, willing and able to ramp up to full time or at least more part time. Something the entire family can get behind and join in on.
Real estate touches so many different aspects of one’s life that an agent or broker could easily add on extra value-added services to strengthen their past relationships and develop a pipeline of future clients to boot. Well if this great economy has taught us anything it’s that we need to have a multitude of skill sets in order not to just survive but to flourish.
