Diversify – Dave Glardon

Good morning! I hope your day is off to a nice start.

There was a commercial on the radio where a banker called for a man and his young son answered. The kid told the banker his dad had gone fishing. He bragged, “My dad is the world’s greatest fisherman. And neat, too!” The banker was intrigued. “Neat?” “Yep! Every time he comes home the fish are neatly wrapped in white paper just like they do at the fish store!”

I was never that creative when I went fishing. We’d get back to the dock, open the cooler, and take out the few fish we’d caught. If my wife commented about how small they were, I had a standard reply. “They must have shrunk in the ice.” Hey, it’s physics … I don’t make the rules.

Whether you call it creativity, forward thinking, or just plain lying, there’s something to be said for having a backup plan. Things won’t always go according to plan, so there’s nothing wrong with making sure there’s a seafood market on the way home. And make sure it’s open.

In my early twenties, a business owner introduced me to a word I’d never used before – diversify. In simple terms, it means not putting all your eggs in one basket. Of course, yesterday that was the name of the game as kids around the world ran around picking up brightly colored eggs. At least those are boiled. If you drop the whole basket, all they do is crack.

But when it comes to life and finances, it’s not always that simple. Find a stock that’s performing well and sink all your money into that one stock. As long as it keeps growing, you’ll make money. But what happens if the company goes under or the product suddenly becomes obsolete? Then you’re left holding a stack of worthless paper.

It works that way in the job market as well. You get an education, find a great job, and settle back into a life of relative comfort. Well, as comfortable as work can be. But having been on the receiving end of a few “restructuring initiatives” (that’s what they call it when they send you home), it’s a lot more comfortable having a job than not having one.

But life happens. And whether you’re talking about employment or the stock market or pretty much anything besides dating and marriage, it’s good to be invested in more than one thing just in case something falls through. In this day and age, you can pretty much count on it. And according to a guy named Murphy, it’ll always happen at the worst possible time.

Now, I’m not a real fan of Murphy, and to be honest, I’m not even sure he’s a real person. But Murphy’s Law is well-known to most of us: “Anything that can go wrong will go wrong, and at the worst possible moment.” It’s a little pessimistic for my taste, but reality says we need to be prepared for those times when things don’t go as planned.

If you’re an investor, it means spreading your money around a bit. Sure, focus on the one that is making you the most money today, but always be on the looking for something additional. In the job market, it means keeping your resume up to date and networking with others in your profession just in case.

And unless you’ve reached a point where you could retire today with no additional sources of income, diversification is even more critical. The days of company-funded retirement are long gone. Social Security appears to be relatively safe for now, but who knows what the future holds? And if you think your 401(k) is safe, we need to talk.

The closer you get to retirement age, the less time you’ll have to recover from an unexpected scenario that wipes out or drastically reduces your income. Success in the stock market is a long-term strategy. And retirement plans go bankrupt just like anything else. Could you withstand a shock this late in the game? Most of us can’t.

And if you’re younger, that’s both good and bad. You have more time to get ready for retirement, but you’re also that much more likely to be called into HR with unpleasant news at some point. That’s not a reflection on you, but on employment in general. Job security isn’t what it used to be, and that’s not likely to change in our favor.

Bad things happen when we least expect it. Having a backup plan can make the difference between survival and bankruptcy. What’s your plan? Could you implement it on a moment’s notice? Or would it take a little time?

Diversification is insurance against disaster. It doesn’t mean you’ll never feel the pain of income loss, but it can certainly minimize that pain. Do it right, and you can match or even exceed your current income. Then your biggest problem is where to spend it.

That’s all for now. Have an awesome day!

Good morning! I hope your day is starting off nicely.

I woke up this morning thinking back to when I was a young boy, probably 12 or 13. Yes, I can remember that far back, thank you. Times were a lot easier then. Not because times have changed that much, but all I had to worry about were pimples and girls. As it turned out, there wasn’t much I could do about either of them, so all that worrying was for nothing.

One of our pastimes back then was daredevil stunts on our bicycles. Understand, this was way before the days of bicycle helmets, which probably explains a lot. Yes, I bounced off the ground a few times. And our default response was to figure out what went wrong, then do it again a little faster.

That was in the days when Evel Knievel was a star, and you could instantly spot a home with an adolescent boy by the makeshift ramp in the front yard. It was pretty simple, actually. A narrow sheet of thin plywood propped across a big rock, with a loose gravel approach and a car parked in the landing area. What could possibly go wrong?

Suffice to say we suffered our fair share of scrapes and bruises, and I’m pretty sure Dad knew the source of those scratches on the side of the car. We’d hit the ramp, the plywood would shift, we’d go off sideways, and flip over the handlebars when we landed on the front tire. A little Bactine and some fresh bandages, and we were at it again. “See if you can find a bigger rock!”

If this sounds even remotely familiar, welcome to my world. I wasn’t a daredevil by any stretch. I was just a typical boy having fun. And I guess that mentality hung around long enough to drive some of the decisions I make today. No guts, no glory. I’m pretty sure my car has a spare tire, but I couldn’t begin to say if it has any air in it because I’ve never checked.

Dad used to drill that into me … “Check the air in that spare tire, boy!” Okay, Dad came from an age where tires were a little less reliable and driving around on “may-pops” was a time-honored tradition. He’s told me several times about a short trip where he got a flat, put on the spare, and then the spare tire went flat. Sometimes, you just can’t win.

Driving around without a spare tire isn’t overly intelligent, even though a lot of newer cars don’t have one anyway. But it’s something we never think about until we need it. Then all of a sudden, we find religion. “God, PLEEEEZE let this thing have air!”

We’re in the middle of some very unsettling times, and all indications are that we’re nowhere near the end. In fact, it seems to be ramping up again. Millions of people are unemployed, and those of us who were lucky enough to keep our job the first time may not be so lucky again. A lot of companies are barely surviving and one more blow will finish them off.

The question is, do you have a spare tire? Does it have any air in it? “I’ve got a few bucks in the bank.” That’s great. How long would it last if you had to live on it? For most of us, the answer is “not long.” A month or two? Maybe six? What happens after that? Hopefully that spare tire is capable of breathing in new air, because it’ll go flat long before you’re done using it.

Now, more than ever, we need multiple streams of income. I’ve always been able to add in a little with stand-up comedy and freelance writing, but it’s never quite enough to live on. How about you? If you had to suddenly start paying the bills without a weekly paycheck, what would you do? This isn’t about doom & gloom. It’s about having something to fall back on, just in case.

Dig the well before you get thirsty. I didn’t make that one up, but it’s one of my favorite quotes. Are there things you could do to earn an income if you suddenly lost your job? Sure, there are dozens. But most, if not all, will take a fair amount of time to get started and up to speed. Meanwhile, those bills just keep coming.

The time to start is now, before you need it. Hopefully the need will never arise, but what’s the worst that happens then? You have extra money and have to figure out how to spend it? That’s a problem I could live with. And if the need does arise, you simply shift gears. Challenges are only a problem when we’re not ready for them. When we are, they’re just another path to success.

That’s all for now. Have an awesome day!

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Tag: Diversify

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