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What you do today decides how you'll dare tomorrow. So click the banner to learn more. (upbeat music) - There's a real paradox that we've got to face with personal financial planning when it comes to our income and income sources. And the paradox is this, the more specialized you become, the higher the potential for higher income.

However, the more specialized you become, the more vulnerable you are to changes in the market condition. So how do we balance the need for specialization for profit potential with the need for diversification for the purposes of developing safety? Today, my thoughts and suggestions for you. (upbeat music) Welcome to the Radical Personal Finance Podcast.

My name is Joshua Sheets and I'm your host. Thank you for being with me today. This is the show where each and every day I work with you, virtually of course, to help you build and implement a plan for financial independence. And basically every day we wander around the same major themes, practically five of them.

And today we talk about increasing income and avoiding catastrophe and how those integrate together. (upbeat music) (upbeat music) Today's show comes as the result of a question from one of the patrons of the show. At the highest level of patronage, the $200 a month level, one of the benefits of that level is that you get to request a show topic and I create it for you.

And today's show is the result of a question from one of the patrons. The question came in in this format. So Joshua, how can I balance the risk and return profile of having one focused all in business? As an example, a financial advisor who's just trying to scale up with more clients versus having multiple, but perhaps not directly related businesses.

Businesses that are diversified, but there's less ability to leverage knowledge and direct expertise across all activities. So that was the inspiration for today's show. I'm gonna expand it beyond the context of business because I think there are some principles that can be applied both in the context of business and in the context of employment.

They're really simple. As an employee, you are the master of your own business. You are the president of your own personal services corporation, as I like to think about it. And your best client just simply happens to be whoever your employer is right now. I think that's a very useful way to think about your job.

And I think that if you think about it in that context, then it makes the principles universally applicable. But the decisions that we face are really challenging. If you look at the world around, and here are just a few of my premises as part of our introduction, you I think will find that specialization is the key to wealth.

This has been a long known economic concept and I guess probably popularized with the work of Adam Smith, 200 and what, almost 250 years ago. And that was the, he was one of the first people who remarked on the division of labor. His famous example, I think the pin factory and how if you made, if you brought the making of pins down to a specialized services, then you could produce many more pins than a master pin maker could do doing it all by themselves.

And that has driven really in many ways the development of the free market economy in which we live. And the more specialized you are, the more productive you are able to be personally, also the more productive the economy is as a whole. And also because we often measure productivity in terms of financial benefit, the more money you're gonna make.

But how do we balance that with the risk that comes in? Most of us would be dead if we destroyed the overall specialized, highly divided labor economy that we live in. If all of a sudden something happened that caused that division of labor economy to fall apart, most of us would be dead in a few months.

We have no ability to create the, to create the needs that we live. How many of us could build our own modest shelter to live in overnight, let alone build a house that would keep our children warm and keep the rain off of our heads? How many of us could extract food out of the ground with any kind of sustainable regularity?

It'd be very, very difficult. Thankfully, the economy in which we live is quite resilient. And somehow through the miracle of the free market, we don't go through many of the shortages and problems that many other people have gone through throughout history. But this is always a threat. Now, I'm not gonna dig into severe disaster planning.

We're not gonna try to talk about the end of the world as we know it today, although that's certainly a worthy topic of conversation. But today we're just gonna keep it simple and talk about it in terms of the metrics of profit. How do we get through this? So specialization is the key to wealth.

So I think about it as a paradox between specialization being the key to wealth and diversification being the key to safety. And safety is often the key to personal happiness, or at least resiliency can help you to get through more aspects of life. And I'm gonna share with you some ideas.

Before I share those ideas with you though, I wanna cover our sponsors. Sponsor of the day number one is the YNAB budgeting software. YNAB is an acronym that stands for You Need a Budget. And the special thing about YNAB is that this was actually the number one most requested advertiser by you, the listening audience.

Many episodes ago in the show, I put out a request and said, "I'm thinking about bringing on advertisers. And if you have a suggestion for who you'd like to see on the show, send me an email." That day I received multiple emails. Ultimately I received over a dozen emails from people saying, "You should get YNAB.

I love YNAB. You should get YNAB. I love YNAB." So of course I reached out to YNAB and requested that we talk and we were able to arrange a business relationship and I brought them on the show as an advertiser. But YNAB is really a brilliant piece of software because it solves many of the budgeting problems that we face brilliantly.

And it allows you to get control at the most basic, basic level. You will never achieve and maintain massive long-term wealth unless you are able to maintain control of your finances. But people often make a mistake and they say, "Well, if I have lots of money, then I'll learn how to manage it." Well, guess what?

Some people blunder into lots of money, but because they don't know how to manage it, the money quickly flitters out of their life. And so the key is manage the money that you have and over time, you may have more to manage. If you are effective with managing the money that you have, over time, you'll have more to manage.

And YNAB is a brilliantly useful tool. This is the tool that I use for all of my personal budgeting after trying it out again. And by the way, for the whole story on that, go listen to episode 246, was an interview with the founder, Jesse Mecham, and you can hear my long story with YNAB.

But after trying it out again, I immediately saw the brilliance of their updated software solution and switched all of my personal and business accounting over to the YNAB platform, and I love it. So you can try it with a free 30-day trial at radicalpersonalfinance.com/ynab, Y-N-A-B. radicalpersonalfinance.com/ynab, you'll be able to download a free 30-day full-featured trial.

You'll have access to the classes that they teach you. They have some really good classes and webinars where they teach you how to use it, how to manage the fundamentals of your budget, and download it free, try it for 30 days. If you don't like it, you don't have to buy it.

If you do like it and you wanna buy it, it's very reasonably priced. I don't remember the exact number. I think it's somewhere in like the $60 range. But it's a great, great software package. I strongly recommend it. At least try the free version. And please use that tracking link so I get credit for your downloads.

radicalpersonalfinance.com/ynab. Sponsor of the day number two is Paladin Registry, and I'm thrilled to bring you Paladin Registry because this was also a solution to the most requested problem on the show. Biggest question I get, Joshua, how can I find a great financial advisor? And my standard answer, I don't know.

So I worked on that and worked on that for months, and ultimately the best solution I've been able to come up with so far at least has been Paladin Registry. Paladin Registry is a registry service and a vetting service for financial advisors. Their founder, Jack Waymire, was a former financial advisor himself, and he was frustrated with how hard it is to be confident of the character and integrity and skill and qualifications of a financial advisor.

So he created this service called Paladin Registry. For details, listen to episode 248 of the show over an hour interview with Jack where we talk about the process of finding a financial advisor. We talk about how and why Paladin was created and what they do, how they vet their advisors, all of that stuff in detail in episode 248.

And then if you'd like to consider interviewing some financial advisors in your area, go to radicalpersonalfinance.com/paladin, P-A-L-A-D-I-N. Radicalpersonalfinance.com/paladin. The way it works is that will take you through to a landing page. You'll put in your name, your phone number, your email address, and where you live, and your zip code, and then the amount of assets that you have that are under consideration.

They'll use that information, and they will send you some information of some advisors that are close to your area that you can be able to use and speak to to see if those advisors might be good for you. You don't have to hire them. I don't get paid any more or less if you hire them or don't hire them, so that's no problem.

But at least start with interviewing them and see if some of them might be able to serve you. Let's dig into our major question now. Let's start with a simple example of the importance of specialization. And think of, simplistically, a young worker, fresh out of school, just entering into the labor market.

Most young workers that are in this situation really don't have a lot of skills or areas of specialization. Perhaps if they've gone to some sort of university training or gone through some kind of training program, they might have more skills and more of a specialized market, and we'll get to that in a moment, but many of them don't.

And so when you look at the labor market, that means they have a huge job market available to them. Non-specialized laborers have a massive job market, but they also have limited potential because you must be more specialized in order to earn a higher income. And this is a real challenge to manage from a career perspective.

Think about the example of a restaurant worker. Let's say you get a job as a restaurant server. What's your risk if the restaurant that you're working for goes out of business? Well, it's very little. You can just go and find another restaurant and get another job, and there's restaurant jobs all over the place.

Perhaps you might be subjective to the seasonality of employment demand. You might be subjected to changes in the local economy, a growing town, a shrinking town, but if you wanna work in a job as a restaurant server, you can pretty much work a job as a restaurant server. There is plenty of labor and there's plenty of jobs available.

Now, you're not gonna make all that much money because there's plenty of labor and there's plenty of jobs available. And the job in and of itself is pretty basic. All my friends who've been servers like to tell me, "Joshua, you don't know how hard it is." I'm not saying it's not easy.

I'm not saying it's not work, but it's pretty basic. It doesn't take a whole lot of training to figure out how to do the job. Well, what if you become a little bit more specialized? So instead of just becoming a generic restaurant worker, you perhaps get a job as a high-end steak restaurant that's known for a higher level of service.

Well, now you're increasing your potential for income, but you're also increasing your risk because there aren't as many fine dining steakhouses in your town as there are restaurants. So if that's your area of specialty, you have a higher risk, but you also have a higher potential return for your work.

So you gotta manage these two things together. You wanna go specialized because that's going to result in more income, but you also have to be careful because the more and more specialized you go, the smaller and smaller the market. It's the same whether it's selling the products of your business or selling your personal product of personal services to a company.

I do not believe that there is one answer to this problem. Rather, I think the answer is to be aware of the risks that you face and how these things will change over your lifetime. If you're advising a young man or young woman, you would encourage them to become specialized.

That's why we send people to school. We sell people to go get a college degree. What is that supposed to be doing? Well, it's supposed to be giving you a specialized knowledge or if you go to a trade school, what are you doing? Well, you're getting into a more specialized market.

If you go and learn how to weld, now you have access to the welding market. And as a qualified, competent, perhaps certified welder, you're going to earn a higher wage than just a general assistant on a welding shop. But you're also exposing yourself to the risk. So early in the career, you wanna specialize, but you also wanna stay broad because you don't know what's the best area of specialization.

And that's where diversification comes in. If somebody has a lot of experience in a lot of different fields, a lot of different industries, they're gonna have a better idea of where they should specialize. But at some point, you've gotta really commit. You gotta go all in and you've gotta get from the bottom of the stack to the top.

This is where the Pareto principle comes in. The Pareto principle, also referred to as the 80/20 principle, for some reason that I don't know how to explain, seems to govern just about everything in life. It governs who has the wealth, it governs who earns the income, it governs who provides the results, and it should be governing your career pattern.

But if you go out in just about any field, the history of it, if it's your first exposure, there was an Italian, as a legend goes, there was an Italian economist named Vilfredo Pareto who was out looking at his pea plants. And he started doing an analysis, because this is what Italian economists do when they're working in their garden is they start counting the peas.

And he realized that 20% of his pea plants were producing 80% of the peas. And 80% of the pea plants were producing 20%. Well, he extrapolated that and started measuring other markets. And today, this has been proven to be true in many industries. 20% of the world's population owns 80% of the wealth.

80% of the world's population owns 20% of the wealth. In any field, 20% of the field will earn 80% of the income. I used to measure this when I was in sales, I would look at the sales reports, and I would try to run through and figure out, is this true?

Just with my own unscientific approach, and I found it was usually pretty right that about 20% of the salespeople at an insurance company produce 80% of the sales. So the key is, how do you go from the bottom 80% to the top 20%? Well, you're gonna get there with specialization.

But once you do, you're gonna have more and more benefits, more and more rewards. Incidentally, the 80/20 rule is also applied at the higher levels. So the top 20% of the top 20% earn 80% of the income, or have 80% of the wealth of that top 20%. And then the top 20% of the top 20% have 80% of the top 20% of the wealth, and it goes on and on and on.

I've done this, do this sometimes for fun when I read studies about income inequality and wealth inequality, and everyone's all upset about, everyone's all upset about who has all the money in society. And if you run the numbers, what you find, though, is you basically find a massive Pareto distribution.

You always find the top 20% of the top 20% of the top 20% of the top 20% own 80% of the top, you know, 80% of the wealth. And it breaks down, I ran the numbers, I don't have them at my fingertips, but I read an article, it was about 1/10 of 1% of the world's population owns 50% of the wealth, something like that.

I ran the numbers, and it was exactly what would be expected based upon a Pareto distribution. Now, why is that the case? I don't have a clue, it just is. And it's the same in every field, it's the same in every industry. And the useful thing for you is that you can apply this knowledge to your field and to your industry.

But what you'll see is that if you wanna go from the bottom 80% to the top 20% of income earners, you're going to have to become more specialized. And if you wanna do it again, you're gonna have to become more specialized still. But what do we do with the risk that specialization brings?

Let's talk for a moment the language of stock investing, 'cause that's where we usually are talking about diversification. And I can't prove this, I haven't seen studies on this. If anybody can prove or disprove this with any research material that you have found, feel free to comment on today's show notes and post links to articles proving or disproving this.

But I would bet a good amount of money that if you went through and reviewed the portfolios of various investment managers, you would find that 20% of the stocks produce 80% of the results. And 20% of the top 20% produce 80% of those results. The way those numbers work out is that the top 4% would produce 64% of your results.

And I bet it breaks down more and more and more. The place I've seen this most clearly is usually in venture capital, where they find a couple of unicorns, maybe one unicorn, one massive winner, and that makes up for a whole long string of losers. So why do we diversify?

We diversify for safety. But what do we give up by diversifying a stock portfolio? We give up potential returns. Or probably said more precisely, we give up the opportunity for huge returns. Because there's always gonna be some money that we didn't put on the big bet. Now, look at the richest people in the world and show me one person who got there with a diversified portfolio.

I've never seen him. I'm not aware and I couldn't cite, I would put money on the fact that he doesn't exist. Whether it's the Forbes 400 or any list of the top rich people in the world, show me a person who got there with diversification and I'll do whatever the appropriate humble thing is to eat my words.

I don't think they exist. Or at least they don't exist in the beginning. There might be people there who are diversified after they've gotten rich, but nobody gets rich with diversification. Look at the richest people in your town and show me one person who got there with diversification in their career.

Doesn't exist. The rich people in your town got rich either because they had one business that became massive or because they became a highly paid professional in their career in an area of specialty that was valued in the marketplace. But should we then continue to bet it all on something?

Well, maybe in the beginning if we can afford to lose it all or if we have a good enough backup plan to move to after we lose it all. But we've gotta pay attention to that diversification over time. And I'm convinced this is the way that we should be looking at it is let me specialize but also diversify for my specific risks.

And if you do both of those things, you can make a major difference over time. When I was a financial advisor, I was very uncomfortable with the idea of having all of my income tied to stocks. And so the way the financial advice business works is as you start to build a practice, you're gonna be earning fees off of your investment management revenues.

And if your fees are tied to usually a percentage of the assets under management, let's just use 1% as a good generalization, what that means is your income is largely due to the value of the accounts. Well, if you go into a situation where all of a sudden the value of the accounts declines by 20 or 30%, which can happen in any random year in the stock market, that's gonna be a massive impact on your income.

It's gonna cause a 20 or 30% direct decline in income, even if no clients leave, and it's probable that some clients are starting to start to get nervous in that situation. When I started in the financial advice business in 2008, I was surrounded by hurting financial advisors who were going through severe shortfalls because their income was down substantially.

And I was surrounded by hurting mortgage brokers who were falling apart and losing everything. I was surrounded by hurting construction builders who had put it all on housing, and they had built spec houses, and they still own three of them, and the value was plummeting, and they'd spent all their money on boats, but their investments were all in real estate.

And now the value of the real estate is going down. That was a formative thing for me where I said, I'm never gonna have all of my investments tied to this one thing. So I focused very heavily on specializing and going after the highest value activities and markets that I could go after, but I also always thought about how can I diversify?

And I think that the financial advice business is a good metaphor, and you'll have to figure out how to apply it in your own world. But the specialty that I could go after was financial advice or the specialty I chose to go after. But I wanted to diversify my income, so I worked to have specialized clients, but to diversify income sources, have insurance revenues, have investment revenues, and then I worked to diversify my own portfolio.

So that would mean diversify the portfolio within the standard asset classes, but for me at that time, I was looking to say, how can I diversify my own personal investments out of stocks? Because I don't wanna have all of my income and all of my investments tied to stocks.

This is what's so deadly if you're not thinking in terms of diversification. If I, let's say I went through some, I was accused of some financial crime, and this financial crime was exposed right in a period of market turmoil, and now I lose my license, and I all of a sudden am facing the closure of my business, I lose all my clients, I lose all my revenue, and it's coming usually at a time when there was fraud in the marketplace.

That's when people sue with financial advisors, when there's fraud in the marketplace. So the markets are down, they're all on a heap, and now all of my financial stability is not there. So for me as a financial advisor, I wanted to be very careful of having everything invested in stocks.

And I think you can find the area that would be applicable to you. You can apply in any business the concepts of specialization and diversification simultaneously. To repeat for a moment from the financial advisor space, the specialty that you can go after in the financial advisor space that would be the wisest specialty is a specialty of client, working with one specific type of client.

That allows you to develop your expertise and to be known as the go-to guy or the go-to gal for one specific market opportunity. As a specialist, you'll be sought out. And the more specialized you can go, the better. But within that specialty, you should look to diversify. For example, let's say that you are going to specialize in working with the financial needs of, I don't know, I'll pick on since Ben Carson is running for president, pediatric neurosurgeons.

The pediatric neurosurgery community is a very small community. And so if that were your chosen specialty, you could develop a real area of expertise within that specialty to reach that community. But you could also diversify that by working with pediatric neurosurgeons all across the country. You could diversify by developing a practice that helped pediatric neurosurgeons with their investment needs, but also with their insurance needs, and also with their accounting needs, and also with their budgeting needs, and also with their kids' college needs.

That way you're lowering the risk in your specialty by both building a stronger client relationship because you're working with them in more areas, and by leveraging multiple areas of income sources so that if a client leaves, or if the client's finances are dramatically affected, it's not all riding on one area.

The thought process is what will create those strong results and start to build resilience in your career and resilience in your business. I used financial advisor examples here because many of the listeners are financial advisors, and this particular question came from someone who is a financial advisor and who is facing this problem.

In a moment, I'll go on to other areas, but what would be a mistake as a financial advisor is to try to diversify across all markets where you don't have the ability to capitalize. So that's why you need a specialty, you need an area of expertise, you need a real specialty, and then you diversify within that.

Now, there comes a stage in, I think, all of our lives at which we've built our fortunes, we've started to make a substantial gain, and we wanna be careful about how far we go with that. The best example that comes to mind is that dentist that caused an international, I guess, furor some months ago when he killed the lion over in Africa, and everyone's all upset at him.

So the day before the news story, he has an active, thriving practice, and he has loads of happy customers, he's obviously making plenty of money, he's traveling around the world hunting and earning lots of money, has lots of customers, and he may have had a very diversified business. He may have helped clients in different areas, he may have had clients from various walks of life, so he had a diversified business.

But he'd built his fortune. And here's the problem, his business was utterly destroyed after everyone starts getting mad at him for killing the lion. Destroyed overnight, utterly destroyed. So in that context, what was his backup plan? I hope he had one, I don't have any idea if he did or not, but what was his backup plan?

And this, in the world that we live in, is probably just an incredibly important thing for all of us to consider. Another example that comes to mind was that lady who was a marketing executive and posted a tweet about something about going to Africa and hope I don't get AIDS.

And there was the whole furor that happened on Twitter that resulted by the time she landed in the airport in Africa, she was fired from her job, and basically half the internet world knows about her and hated her. How do you recover from that? You've got to have some fallback plans.

And so I look at it and I say, go back to your goals. What's the appropriate level of safety for you? What's the minimum level? And work to secure that so that no matter what happens, you can move on to the next thing. This is where being debt-free is so powerful, because if you're debt-free, you don't put yourself at the risk of wipeout risk.

Do you get slower results? Probably, but you avoid wipeout risk. And at the end of the day, that is the bigger risk. You can't spend, if you've got a billion dollars, you're never gonna spend it all. If you've got a million, you might spend it all, but most people who are millionaires aren't going to be able to.

So the key is set some minimum level and then ratchet up, protect. Set and protect. So with that dentist, I hope that he was taking some of his income, and in addition to spending it, he was diversifying out. Diversifying into an intelligently built investment portfolio, diversifying into other businesses perhaps, diversifying with regard to other interests.

And hopefully he was keeping a strong network of some kind so that he could have other fallback plans. I use those two examples because they're vivid examples that most of you should be familiar with. And I think they're worth paying attention to. At any point in time in today's world, you anger the wrong person and they can destroy your primary business.

So we need that fallback plan. Gotta build the primary business. Generally, people who are out to destroy don't go after people who are broke and bankrupt and living on the street. But once you've built it, you've gotta diversify and protect. Let me share with you a couple of ideas of some other alternative characteristics, and I'll just show you how I would see these things applying in different areas.

Let's assume that you've built a career for yourself, working in a job in an industry that is prone to ups and downs. I was really struggling to come up with an industry to use as an example that would be widely understood. The best I came up with was actually the military.

So consider for a moment the area of specialization within joining the military. Let's talk about the US military. If you can join the US Army or the US Navy as a grunt and you're just a basic low-level employee, well, what do you do to increase your income? First thing you do is you increase your income by moving up in ranks.

So that's where specialization comes in. More work is required, but it also comes with more income potential. Not a huge income potential, but there is more income potential. What is the other area and way in which you specialize in the military? It would be specialization of area of focus.

So if you go from being an Army infantry person to a Navy SEAL or a Green Beret or one of the special forces, you're automatically becoming more specialized. You're gonna develop along the way certain skills that will lead to your differentiation. These aren't always measured with money in the military world, but they might be.

But the basic skill, the most famous these days, it gets to get all the press, is the Navy SEALs. What's the basic skill of a Navy SEAL? Killing people effectively. So that's a very, very highly specialized skill, and some of the guys in that world are the best in the world at it.

But it's also a skill for which there aren't that many employers. The life and the career prospects of somebody who is going out of being in the Navy SEALs or the Green Berets or some type of specialized option like that is very limited. The market for people with highly skilled in killing people is limited.

You can go join a special military contracting company or go be a soldier for hire somewhere. That's possible. Or you wind up in other areas of law enforcement, other areas of protection careers, bodyguards, that type of thing. That's where those skills are relatable. But ultimately, the specialization leads to risk, and it leads to a very small market for services.

And once you leave the SEALs, there aren't gonna be that many other jobs that are ever gonna match the excitement of being in the SEALs. But what do you do from a career perspective? Well, if you analyze and you look, in order to achieve specialization, you've also built diversified skills along the way.

So that's where you see people, I see all the time, the Navy SEAL guide to leadership, or the Navy SEAL guide to physical fitness, or blah, blah, blah. It's taking some area of diversification and then offering it as a more highly specialized area. All of us have the opportunity to do that.

And that's where, along the way, as you're a specialist, you should also be diversified and be a generalist. You should be widely reading, widely knowledgeable, and then looking for those skills that translate over. For me, one of the skills that I learned, and one of the primary reasons why, years ago, I joined Northwestern Mutuals, I wanted to learn to sell.

I had the narrow skill set of financial knowledge, and I knew I could learn that, but I wanted the broad skill set of selling. Once you've learned the skill of selling in one field, that should be more translatable over to another field. So along the way, pay attention to the principles that are universally applicable.

In conclusion, I believe the answer to this paradox is to do both, and simply primarily to be aware of both truths within the context of your own personal situation. Recognize that what I'm sharing today is a crossover between points number one and four of my framework for wealth. So point one is increase income.

Point four, excuse me, point five, yeah, point four is avoid catastrophe. And so at every stage along the way, you can be holding these things practically together and saying, how do I increase income? But also, what exposure does that open up for me? What risk does that take for me?

How do I avoid catastrophe? In your specialized scenario, in your specialized situation, there is an answer that can handle both of these things together. If you are a pediatric neurosurgeon, you have a very specialized skill set, and you avoid catastrophe by purchasing excellent disability insurance coverage so that if you lose the use of your hands, you're protected there for at least some of your income with disability insurance.

You also keep it and maintain it by being broadly read within your field so that if you had to pass from pediatric neurosurgery into another area of neurosurgery, you could do that. Or if you could no longer be a surgeon, you could move to another area of research. Then you manage your risk by diversifying yourself personally.

If you are a pharmaceutical sales rep and you have an inside knowledge of investing in pharmaceutical companies, that can be leveraged to build wealth to a certain point. But then at some point in time, you better get some of that money out of the pharmaceutical stocks and slide it aside into another area that's not connected.

Because if all of a sudden there is a giant scandal about pharmaceutical sales reps or pharmaceutical companies lying to the public and lying to the FDA about their research, well, the stocks drop and your job goes. And now you're doomed. So leverage it while you are building, but then diversify.

And I think that's an ebb and flow that can be maintained throughout life in an appropriate scale. You've got to build a fortune. And if you've got time and you can afford to take some wipeout risk, go for it. At this stage of my life, I'm pretty comfortable with some measure of wipeout risk.

That was why I launched Radical Personal Finance. If this business blows up and falls apart, well, it'd be a bummer, but I've learned a lot. I've built a diversity of contacts around the world. I built a diversity and strengthened my own personal brand. And so if this particular iteration of the business falls apart, it's no problem.

I can leverage that into multiple other related businesses. So I'm willing to take the wipeout risk on this particular business because I'm diversified on the back end. And realistically, I'm young enough. I have enough other fallback skills. I could go out and get a job in the financial planning business pretty easily and have a very healthy multiple six-figure income that would provide for the needs of my family.

But I'm also gonna manage the risk by not putting myself in a situation where it's gonna bring too much undue stress on my family where I run the risk of my kids not being fed or my wife being frustrated and leaving me. So I've gotta manage it along the way.

You're gonna have to figure out what it is for you, but I think you can put both of these things together and use this as a creative journaling exercise. On the one hand, look for how to become more and more specialized in your field because that's where the money comes every single time.

And then also ask yourself, what major risks do I face and how can I mitigate those risks? Be creative with the answer. The answer might be an insurance policy. It might be a savings account. It might be a completely diversified and unrelated career fallback plan that you're building on the side.

But the thought process will lead you to identifying the opportunities and the risks for you. Along the way, track the skills that you have and make sure that those skills are transitioned to something else. To wrap up with a quick point on the initial question with something I think is very relevant.

If you're just managing multiple businesses, unless there's a common thread that you can identify, you're not gonna be good at any of them. But if there is a common thread, you'll be able to leverage that common thread. And that's what you should be looking for. Not unrelated businesses, but diversified businesses where there's a common expertise of some sort.

That's it for today's show. Thank you all for listening. I hope this content is useful to you. I would love to hear your thoughts and feedback. If you agree with something I said or disagree with something I said today, I'd be happy to hear from you. Come to the show page for today's show at radicalpersonalfinance.com and let me know.

If you have interesting articles to share, I don't mention this every day, but I do love to be proven wrong. So I welcome you to show me where I'm wrong. So that way I can learn and that way I can give better information. So don't feel like this is the kind of show where your opinions are unwelcome.

I welcome them. I learn from every single one of them. Thank you all for listening to today's show. If you've enjoyed and appreciated the content, remember to use our sponsors for today, Paladin Registry if you're searching for a financial advisor or if you'd like to talk to some financial advisors to see if they could help you, radicalpersonalfinance.com/paladin.

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You can find the details of that at radicalpersonalfinance.com/patron, radicalpersonalfinance.com/patron. If you would like to get in at the highest level of patronage where I do shows on the topic of your choice, such as I have done today, you can also find out how to do that at radicalpersonalfinance.com/patron. So you'll be able to find that.

We've also had some interesting discussions about that. For you to choose a show that comes in at the $200 a month level. We've also had some interesting discussions about this topic within our Facebook group, the Irregulars group. So if you'd like to gain access to a community of people much smarter than me, you can sign up at the $25 a month level at radicalpersonalfinance.com/patron and you'll gain access to our Facebook group.

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