Diversify and become unsinkable!

Economic Theory often tells a bunch of crap about how people do or should behave.

However, there are also a lot quite useful concepts in economics.

One of them is the Concept of Diversification, stemming from financial economics, and basically saying that you should not put all your eggs in one basket.

By betting on a single stock for example, your returns are obviously great should that stock rise but this chance is paid by much too much risk of loosing all, so it is advisable to diversify among different investment opportunities.

Low tide in Brittany

Better not run your life aground to often…(seen in Brittany, France)

The same holds true for life in general:

Diversify!

Let’s imagine your life being a cruiser on his long travel through a big ocean.

You might start in calm waters and clear weather, but you cannot be sure what lies ahead.

So instead of constructing your cruiser with only one compartment, making it a bit lighter maybe, you should build in as many sheets (“Schote”) and hatches as possible, separating your vessel into a number of different, independent compartments.

That way, if your ship is hit by fate and water starts flushing in, you are not doomed to sink like Titanic. Instead only one or two compartments will be flooded. You will be slowed down, but the other dry compartments will keep you afloat until the pumps and the repair teams are ready to work.
The ship that started without these safety hatches instead, may have travelled faster in the beginning. But if there is some kind of unforeseen accident, it is quite possible for this ship to sink like a stone with the owner having to abandon on his life-boat ultimately – if he has one and if it is hopefully still intact…
Not a very nice situation.

For diversifying one’s life portfolio I suggest to give attention to at least the following compartments:

  • Family and a partner
  • Friends
  • Social Networks (I mean real-life, not Facebook only…)
  • A general positive attitude and merriness (Fröhlichkeit) towards life
  • Stable Health
  • Financial wellbeing and security
  • A good actual job and social esteem
  • Enough Spare-time
  • Good education in general and some flexibility regarding jobs to do
  • Something called “home” (Heimat). A town or region that you know well and where you feel at home and secure
  • Some kind of “belief system”. This might be a religion, a personal philosophy or even a political conviction
  • Some hobbies, things you like to do and which are as independent as possible from your financial well-being
  • let me know if you have any more suggestions – the more the better.

Most people will not be able to maintain all the compartments above in a perfect manner, but you should try to come as close as possible, because if you manage that I think you will be virtually unsinkable, even in the biggest of storms.

You can see people who survived wars and famines. Some broke and others not. There might be other factors as well, but I think the above has a lot to do with it.

So start diversifying today!

Woodpecker

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3 comments on “Diversify and become unsinkable!

  1. […] After being a board member for 10 years or so, he finally was fired during a reorganisation. He was 55 or so and had probably made a double-digit million Euros, big villa with a nice pool, private guard, huge car with driver and stuff. I mean, in conventional terms he had it all. Yet he fell into a desperate depression for years, had to do extensive therapy etc. until he finally recovered and is running his own consultancy service now. What does it tell you? Money and power do not make you less vulnerable to the blows live can deliver – maybe even on the contrary, because you are too little diversified. […]

  2. […] as a good downshifter, you never made your happiness depend solely on money, and you know that money is a means only and never the […]

  3. […] be nice if they do (and would increase productivity) but if not, as a downshifter you should have a whole set of sources of appreciation, so why rely to get it from your company/boss? Continue to do a good job anyway. Be friendly and […]

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