Diversification is one of the most important concepts in all of investing. It is a generally accepted fact that diversifying your investments by including different types of financial assets in your portfolio can decrease risk and lead to higher long-term returns. However, I believe that the benefits of diversification extend beyond choosing the right mix of assets in our investment portfolio. I believe that diversifying our professional skill set, pursuing a side hustle, and generating multiple streams of income is one of the best decisions we can make.
Benefits of Diversification
I'm sure that many of you have heard the saying “don't put all your eggs in one basket.” Investing in the stock market Is uncertain, and there are inherent risks that could strike unexpectedly. The CEO of your favorite company could be found guilty of embezzling money, or the company could cause some environmental disaster that causes the price of the share to plummet. If you have put all of your money into that one company, commodity, or crypto, you will have no other safety net to protect you if the price of that asset declines dramatically.
By contrast, a diversified portfolio protects you and spreads these risks. Let’s suppose that instead of owning stock in one company, you own stock in a hundred different companies. If one of them suffers a huge decline in price, obviously this will be a setback, but it won't be a complete tragedy. You will still have 99 other companies that are doing well and generating profit to offset your losses.
Job and Income Diversification
For the vast majority of people, our primary source of income is not our investments, but rather the income that we earn from a job. Our investments are for retirement, but our job provides the crucial income that we need to pay for day to day living expenses. In my opinion, our job is far more important than any investment that we will ever make, but hardly anybody ever talks about the importance of diversifying our job. Why?
Jobs can be just as unpredictable as the stock market. Tomorrow morning, your boss could fire you because the company is facing budget cuts, you failed to meet a sales quota or even simply because they don’t think you are a good fit for the company. Your job could be replaced by automation, or your company could be acquired by a larger firm that doesn’t think your position is necessary anymore. The point I am trying to make is that our jobs are just as risky as the stock market, but we take them for granted and don’t appropriately diversify to protect ourselves.
When we branch out and learn a new skill or start a “side hustle” one of the most immediate benefits is income. When we are fully employed and things are going well, we might not really need the money from our side hustle for day to day expenses, so we can put this money into our retirement fund, our savings, or even use our side hustle as our “fun money”. If we were to lose our primary job, however, that income from the side hustle becomes invaluable overnight. It might not be enough to fully support our lifestyle, but every bit helps, and the income from our side job can be a nice supplement that helps us stretch our savings further and gives a little bit more time to look for a new full-time job.
Skill Set Diversification
Even if you never get fired, having a side job can help you become better at your main job. I started creating YouTube videos several years ago; this process required me to collect information, organize my thoughts, and deliver an effective presentation to get my point across. Although my job in the military was primarily a “hands-on” job, there were also times when I would have to give a class to junior soldiers, write a report, or present an analysis to a superior officer. Even though I never made any money from my YouTube videos, I still learned valuable skills (organization, concise communication, confidence) that helped me do better in my primary job. Even if your side hustle is simply a hobby that you never earn a penny from, it can still give you valuable skills that can help you succeed in your daily job.
Not only can our side jobs give us a little bit of extra income to make it through tough times, but the skills that we learn in our side jobs can help us land our next full-time job. One of the worst things to do on a job application is to list your previous work history as “unemployed.” The employer will already be thinking in their head, “Why was this person unemployed?” “Were they a trouble maker?” "Why aren't other people hiring you?" If you lose your full-time job, having a side hustle can demonstrate that you are still working on being a productive member of society. It looks much better to put “Author”, “Content Creator”, or “Self-Employed Educator” on your resume instead of “Unemployed.” I’m not suggesting that you lie in your interview or try and cover up the fact that you got laid off from your previous job. Employers will know that “Content Creator” or “Self-Published Author” isn’t a full-time job. You might still have to answer some questions about why you left your previous job, even a part-time side hustle shows that you are the kind of person who is going to take initiative and is willing to work to get things done. You're the kind of person that creates opportunities instead of waiting for them to come to you.
Side Hustles = Balance
Lastly, having a side hustle is important for emotional reasons. Each of us is going to have a bad day at work. We are going to get reprimanded, passed over for promotion, or simply have a bad day. Having a side hustle gives us a creative outlet and a source of relief. Let’s suppose that you had a terrible day at work, and your boss criticized your performance. At this point, you might be feeling like you are no good at your job or that you are worthless.
Instead of going home to feel sorry for yourself, you go home and check on some of your side jobs to get your mind off your main job. Perhaps you see that someone on Uptrennd/Publish0x/Steemit has told you that your blog post was really helpful, maybe someone placed a really high bid on one of the pieces of artwork that you created, or maybe you have a student from one of your online classes telling you how much they enjoyed your class and how you did a great job of explaining everything. It feels nice to get a compliment on the work you have done, and having a side hustle has really helped me on days when I was feeling down about my “normal” job.
A side hustle helps us not to wrap all of our worth into our main job. When you only have one job, it can become easy to define yourself in terms of that one job. Your whole identity can be defined by your job as a firefighter, teacher, businessperson, etc. Having a side hustle is important because it allows you to express your creativity and give something to the world outside of your main job. It allows you to branch out and realize that you are not just an accountant or a lawyer. You are also an artist, a streamer, a gamer, a gardener, a baker, etc. A side hustle helps bring balance to your life by complementing your primary employment.
I started a new job recently, and it's been a pretty intense process with a significant time commitment as well as some long days and early mornings. Some days, I can barely find the time to log in and comment, much less write a full article. I think it's important to have a well-rounded skill set and different side projects. Even though I can't devote as much time as usual to publishing and creating articles, I still want to remain as involved as possible within the crypto space, reading articles, and participating in the supportive community here. As we move into the new year, I realize we are all busy and we all work long hours. We can still receive benefits my taking a few hours a week to work on an article or publish a blog. This year, I would like all of us to consider the benefits of broadening our skill sets and I would encourage each of us to take a little bit of time each week to branching out and developing a new skill, interest, hobby, or side hustle. We never know where it could lead.
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