An important fundamental of investing and financial security is diversification. Spreading your money among different types of assets such as stocks, bonds, real estate, and collectables means you’re balancing risk and reward. Over time, this approach is much more likely to grow compared to investing in just one asset class. In my experience, the same thing is true about a career. Having a diversified set of income streams is likely to be better over time than working for one company and one industry.
If you have all your money in one company’s stock or one asset class such as gold, you’re at the mercy of market volatility or worse (think of the unfortunate people who had their retirement savings tied up in Enron stock).
The same thing is true of work. When you are fully committed to one company, you run the risk of having your income go to zero if your employment is terminated. Similarly, if you devote an entire career to one industry, you’re at the mercy of the downturns in that industry.
In my own career, I’ve suffered both of these kinds of setbacks. Several times I lost my job and had to deal with months without income. Similarly, I worked for a number of years for Knight-Ridder, at the time one of the largest newspaper companies in the world. With the rise of the online news business, newspaper companies suffered. Not a fun place to be as multiple rounds of downsizing happens.
Should you venture out on your own?
In 2002 I ventured out on my own and specifically challenged myself to be as diverse as possible. I purposefully focused on a diversity strategy like I was using for my investments.
When I have an opportunity to mentor young people, I encourage them to get a liberal arts degree so they can learn how to think before they take specialized training. That way they don’t end up tied to one particular industry based on the choice of an undergraduate degree that leads directly to a single job path. It’s fine, then, to take a specialized graduate degree.
Here are some ways to get diversity while still working for a company:
There’s nothing at all wrong with working for a company. I’m not suggesting that everybody should quit and become freelance! However, I do think it is important to have a plan for what happens if you lose your job or your company has a setback or the industry you work in goes into decline.
Having a personal website or blog or podcast means you own your own real estate on the web which will be an important asset if you need to find something new.
Taking on a few freelance assignments, if it is permitted by your company, can mean you can quickly transition to full time on your own if need be.
Getting international experience can mean you’re seen as somebody who has more diversity than the typical employee.
Taking an assignment in a different part of the company can be beneficial. If you’re a marketer, a year or two in sales can be a huge plus, and salespeople doing time on the other side in marketing is also a great career move.
Like investing in a diverse portfolio of financial assets means a growing nest egg, a diverse work portfolio will pay many dividends throughout your career.