Tuesday, January 13, 2015

Asset Diversification, Gaining A Degree Of Omnipresence, Achieving Independence

Yesterday's post about Bitcoin turning six years old got me thinking about another topic: Asset diversification.

Diversification is often spoken of in the context of stock and bond investments, and many seem to leave it at that. There's far more to it though: diversification of your assets should include other kinds of investments and your sources of income.

These days, most of my "eggs" are in one basket: my pest control business. It accounts for approximately 82% of my annual income, the other 18% coming from other sources. Pest control is a fairly stable industry, so it's not at all much of a risk to just rely on it (unless something huge happens, like an unforeseen regulatory change; there is always the epistemic limitation typically stated, "past performance is not indicative of future results," especially when it comes to jackass bureaucrats) . There are two external factors that bear on this line of work which can slow it, or even put an end to the whole show, however, and these must be hedged against: time and physical aging.

Physical aging brings obvious problems with it: one's body will only carry a person so far before it begins to deteriorate, making many kinds of work hard or even impossible to do. Pest control can be a very physical occupation, so there is a natural limit on how long a person can carry on doing it in this regard.

Time limits the income to be generated from the activity, too, for a simple reason: there is only so much time in a day, and a person can't be everywhere at once. It happens to me all the time during my busy season: I'll be committed to one job that pays X, and I'll get notice of an alternative that pays X+1, but I can't be there to take advantage of it.

That is why I divert my surpluses into other opportunities, and always remain on the lookout for new ones. Therefore, aside from pest control, I currently have a hand in:

Equity and debt investments (stocks and bonds)
Forex trading (currencies)
Rental property
Cash value life insurance
Precious metals
Entropia Universe
Blogging (Hi!)

Later on this year, I plan to launch a couple of small side businesses that will take advantage of some of the half-acre+ of land that I live on these days, too.

By involving myself in all of this stuff, I am helping to smooth out any waves that may come along and rock my pest control boat. As many of the above activities are passive in nature, they also help me "be more places at once" in that they carry on earning while I am awake and working or playing, while I'm asleep, etc., and several of them tap into economies from around the globe. They also pretty much do not require any physical exertion, so I am able to make the wear and tear I inflict on my own body "worth more" by diverting surpluses I generate from activities that do into these non-physical, gainful activities.

Eventually I want my passive and low-activity income sources to surpass my pest control business, at which point I will likely shutter it, for the ultimate goal here, of all of these activities, is to bring all of my interactions with other people as close to being purely voluntary as possible, to own all of my time.

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