A common piece of wisdom is to never put all of your eggs in one basket. This makes a lot of sense. None of us knows what the future holds, so the only way to deal with the unknown is to give ourselves a lot of outs. If one thing doesn’t work out, maybe something else might. And you won’t lose everything either.Â
It’s why most financial experts (myself included) recommend investing in passively managed index funds, rather than individual stock picking or actively timing the market. Instead of going all-in on a single stock, you diversify by spreading out your investments over thousands of different stocks. To use an analogy, you don’t want to push in all of your chips at once – spread it out so you don’t go bust.Â
Diversification is such a normal part of investing that few people argue against it. And yet, in the real world, none of us do this. We all make decisions where we put everything on the line. The crazy thing though is few of us realize this. We go to school, we start careers, and we do all of this without realizing how much we’ve put into this one thing or how risky that seemingly should be.
I quit my job two years ago. It was a huge leap for me. I’d spent five years practicing as a lawyer and law was the only real career I’d ever had. I’d definitely never tried to earn money on my own. But when you put this leap into the context of the other leaps I’ve taken in my life, it’s not as big a leap as I thought it was. I took a big leap when I went to law school – giving up three years of my life and hundreds of thousands of dollars in debt and earnings over those years. In the context of that, quitting my job to try making a living as a blogger and side hustler really doesn’t seem as big of a deal.
We’re all taking huge chances with our lives. When you start to realize it, it can be scary. But it can also be freeing too.
None Of Us Diversify – We All Go All-In On SomethingÂ
A few years ago, my wife made a big decision – she decided to purchase a multi-office practice straight out of her residency. It was an extremely expensive decision and one that I initially viewed as too risky. After years of reading personal finance blogs and seeing people grind their way towards financial independence, that’s what I thought the right path was. Work at a job, get your paycheck, and grind it out.Â
But when you really think about it, it wasn’t that crazy of a decision. My wife had already spent 7 years of her post-college life pursuing her career. She’d spent over $300,000 and more than 20% of her life studying to do this one thing as her job. And when you add in the opportunity cost of all her schooling, it easily cost her close to a million dollars to pursue this one career path. She’s been all-in on one thing for a long time. Was it really that risky to keep pushing her chips in?Â
My own decision to go to law school carried a similar risk. I didn’t diversify. I went all-in, giving up three years of my life and going $87,000 into debt to take a shot at this one very specific career path. And while I did well with it, it wasn’t a guarantee by any means.
It took me a long time to take a chance on myself even after years of finding myself unhappy with the work I was doing. I was scared to quit my job because I was told my whole life that a job was the safe thing to do. I couldn’t put all my chips into something else – it was too risky. But is it really?
Even if you don’t realize it, you probably aren’t actually diversifying when it comes to your life. Most of your income probably comes from one source. You probably spent a lot of time and money to get that one job too. When you add up your years of schooling, how much it cost, and what you gave up to get it, many of us probably spend hundreds of thousands of dollars and years of our life, all to go after one thing.Â
When you realize this, it becomes much easier to bet on yourself and take more chances.
Realize That Most Decisions Aren’t Life RuiningÂ
One thing I’ve noticed about people – myself included – is that most of our decisions seem to be made based on fear. We do things because they’re safe, or they allow us to fit in, or because they’re the path of least resistance.Â
The biggest realization I’ve had in the past few years is about the ramifications of our decisions. Most decisions, it turns out, aren’t life-ruining.Â
It’s hard to think this way when you’re someone that’s driven and has been pushed to succeed. The choices I had to make growing up and as a young adult all made me believe that our decisions are incredibly important. If you make the wrong choice or do the wrong thing, your life is over.Â
That’s just not how things work though. The worst-case scenarios that we think about rarely happen and even the worst-case scenarios usually aren’t as bad as we think they are. When I quit my job, the worst thing that could happen was I would fail and run out of money. If that happened, I could probably get a job again. When my wife bought her practice, the worst-case scenario was that she’d fail and go bankrupt. Worst case scenario, she’d have to start over and get herself a job.
Our decisions do matter. But they aren’t one-way tracks that you can’t turn around on or move to another path. And when the worst does happen, it’s probably not as bad as you imagine.
It’s Okay To TryÂ
It can be scary going all-in on some venture that isn’t what everyone else is doing. But when you realize that almost everyone goes all-in on something – and that you probably already did it – it can be freeing.
I’m still governed by fear – no doubt about it. But I also know that even when I was in my safe career, it wasn’t necessarily safe. I put it all on the line to do that one thing. I could have failed badly. But people praised me for making the smart decision of going to law school because that’s what people tell you to do if you want to be successful. No one tells you to quit your job and try to make money on your own online.
The way I see it, if you’re going to put everything on the line anyway, you might as well put it all on the line for something you really want.
More Recommended Ebike/Scooters
Check out these other ebikes/scooters I've had the chance to do a review for:
- GEN3 Outcross Bike – The GEN3 Outcross is a solid, affordable fat tire ebike that does a good job of doing what I need it to do. It works great for city riding, giving me a smooth ride in all conditions. It’s works really well as a winter ebike since the fat tires give it good traction over snow and ice. Check out my GEN3 Outcross Review.
- Himiway Escape Bike – The Himiway Escape is an interesting bike for anyone looking for a moped-style ebike. If you’re a gig economy worker, the Himiway Escape is particularly interesting and it’s possible to think of it as an investment, especially if you can opt to do deliveries with the Himiway versus using a car. It’s not cheap, but you can definitely make your money back when you compare the mileage you’ll put on your car versus using an ebike. Check out my Himiway Escape Bike Review.
- Espin Sport Bike – The Espin Sport is a good ebike for someone who is looking for an ebike that feels and rides more like a regular bike. There are many ebikes that are really only bikes in name. In reality, they’re basically electric mopeds. The Espin Sport, by contrast, is a bike you could probably ride without the battery and you’d feel like you’re just riding a regular bike. Check out my Espin Sport Review.
- Varla Eagle One Scooter – The Varla Eagle One is an excellent scooter that can make sense for a lot of people. It can work as a primary mode of transportation. You can use it to work on gig economy apps like DoorDash, Uber Eats, and Grubhub. And it can also be a recreational vehicle if you’d prefer to use it for that. Check out my Varla Eagle One Review.
- Fucare H3 Scooter – The Fucare H3 is a fun scooter and I’ve enjoyed testing it out. For a daily commuter or quick trips or errands, the Fucare H3 is probably the scooter I’ll use. It’s portable and easy to maneuver, so it’s just easier to take on the road when I need it. Check out my Fucare H3 Scooter Review.
More Recommended Investing App Bonuses
For additional investing app bonuses, be sure to check out the ones below:
- M1 Finance ($100) – This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account. Check out my M1 Finance Referral Bonus – Step-By-Step Guide.
- SoFi Invest ($25) – SoFi Invest is an easy brokerage account bonus that you can earn with just a few minutes of work. Use my SoFi Invest referral link, fund your SoFi Invest brokerage account with $100 and you’ll get $25 of free stock. I also have a step-by-step guide for the SoFi Invest referral bonus.
- Moomoo (5 free stocks) – Moomoo is a free investing app currently offering 5 free stocks (usually worth around $75-$100) if you open an account using a referral link and deposit $2,000. Read my Moomoo referral bonus guide for more information.
- Webull (5 free stocks) – Webull also gives you 5 free stock valued between $3-$3,000 each if you open an account using my referral link. Here’s a guide I wrote about how to earn your free stocks using Webull.
- Robinhood (1 free stock) – Robinhood gives you a free stock valued between $2.50-$225 if you open an account using my referral link.
- Public (1 free stock) - Public gives you a free stock valued between $3-$70 if you open an account using my referral link.
More Recommended Bank Account Bonuses
If you’re looking for more easy bank bonuses, check out the below options. These bonuses are all easy to earn and have no fees or minimum balance requirements to worry about.
- Chime ($100) - Chime is a free bank account that offers a referral bonus if you use a referral link and complete a direct deposit of $200 or more. In practice, any ACH transfer into this account triggers the bonus. This bonus is easy to earn and posts instantly, so you’ll know if you met the requirements as soon as you move money into the account. I wrote a step-by-step guide on how to earn your Chime referral bonus that I recommend you check out.
- US Bank Business ($500) – This offer is limited to customers in the following states: AZ, AR, CA, CO, ID, IL, IN, IA, KS, KY, MN, MO, MT, NE, NV, NM, NC, ND, OH, OR, SD, TN, UT, WA, WI, WY. This is a fairly easy bank bonus to earn, since there are no direct deposit requirements. In addition, you can open the Silver Business Checking account, which comes with no monthly fees. Check out how to earn this big bonus here.
- SoFi Money ($275) – SoFi Money is a free checking account from SoFi. They’re currently offering a $25 referral bonus if you open a SoFi account with a referral link and deposit $10. You can also make an additional $250 as well if you complete a direct deposit. This is a good bank that is also 100% free, so you won’t have to worry about managing this account. Here’s a post I wrote with instructions on how to earn your SoFi Money bonus: SoFi Money Referral Bonus: Step By Step Guide.
- Fairwinds Credit Union ($100) – Fairwinds Credit Union is offering a referral bonus for users that sign up using a referral link. Fairwinds has no fees or minimum balance, so this is a particularly easy bonus to earn. Since this is a smaller credit union, my gut instinct tells me this offer won’t be around long, so if you’re in a position to meet the bonus requirements, grab this bonus before it’s gone. Here is my step-by-step guide on how to earn your Fairwinds Credit Union bonus.
- Upgrade ($50) – Upgrade is a free checking account that’s currently offering a $50 referral bonus if you open an account and complete three debit card transactions. These bonus terms are easy to meet, so it’s well worth doing this bonus as soon as you can. Importantly, this bonus says that it’s now scheduled to end on April 15, 2023. As long as you get your account opened before April 15th, you should be eligible. Here’s a post I wrote with more details: Upgrade $50 Referral Bonus – Step By Step Directions.
- Current ($50) – Current is a free fintech bank that’s offering new users a $50 referral bonus after signing up for an account using a referral link.Current is an easy bonus to earn and also gives you access to three savings accounts that pay you 4% interest on up to $2,000. That means you can put away up to $6,000 earning 4% interest. That’s very good and makes Current an account I recommend to everyone. Check out my step-by-step guide on how to earn your Current Bank bonus.
- Digital Federal Credit Union ($20) – Digital Federal Credit Union (DCU) is a free, nationwide credit union that I recommend to readers for two reasons. First, DCU has a $20 referral bonus if you open a free DCU checking account with a referral link. Second, DCU has a saving account that gives you 6.17% interest on your first $1,000. Check out my in-depth post on how to set this account up.
- Netspend ($20 + 5% Interest Savings Account) – Netspend is a company that provides 5% interest savings accounts. If you sign up using my referral link, you’ll get a $20 signup bonus once you make your first deposit into your Netspend account of $40 or more. That means you get a 5% interest savings account and a free $20 to start! Make sure to check out my in-depth guide on how to set up these accounts.
- Novo Bank ($40) - Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. In addition to being a good bank bonus, Novo is also a good business checking account. It has no monthly fees or minimum balance requirements and operates a good app and website. Indeed, it’s the business checking account I currently use for this blog. Check out my post on how to easily open a Novo account.
- Varo ($30) – Varo is a free fintech banking app similar to Chime or Current. It’s currently offering a $30 bonus to new users that open a new Varo account with a referral link. The bonus for this bank is very easy to meet, all you need to do is spend $20 within 30 days of opening your Varo account. Check out my step-by-step guide to learn how to earn this bonus.
Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.
Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.
Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:
- SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $250 if you complete a direct deposit.
- US Bank Business. US Bank is currently offering new business customers a $500 signup bonus after opening a new account and meeting certain requirements.
- M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account.
- DCU. Digital Federal Credit Union (DCU) is a free, nationwide credit union that I recommend to readers for two reasons. First, DCU has a $20 referral bonus if you open a free DCU checking account with a referral link. Second, DCU has a savings account that gives you 6.17% interest on your first $1,000.
- Personal Capital. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.
Feel free to send Kevin a message here.
100% spot on here. No decision is ever as critical as you think. I recently read Bezos’ shareholder letters and he often talks about decision making. He labels decisions as either 1) 1-way doors in which there is no return and 2) 2-way door decisions in which you can turn back.
Most decisions are 2-way doors. Leaving your job was a 2-way door, you could always go back. That was my thought as well, when I took the leap. I think it’s pretty rare to find a 1-way door in your personal life. Perhaps having kids. There is no way back from that 🙂
Of course the risk level changes depending on certain things like your age. An employee who is getting close to retirement age may find it much more difficult to find a job again once they quit their current job. And there’s no guarantee you’ll be welcome back to the same position at your current company either.
Agreed, at least in the context of adult decisions and calculated risks. We have two teenagers, and we try to walk a line between the “you need to get yourself on the right path” and “it’s okay to take chances” messaging. Yes, Bill Gates was very successful taking a non-traditional path, but lots of people also make their lives really hard by not taking college and graduate school seriously early in life. And it’s very hard to play catch-up on some of those decisions later on. So, calculated risks and betting on yourself? Go for it. Trying to be a professional surfer when you’ve spent your whole life to date in Nebraska? Maybe some diversification is in order.
Going all in on something is definitely not a bad way to go. I think diversification could be viewed as only for those people who have enough means to actually diversify away from something whether it be through investments or a career option.
Trying and failing is the only guaranteed path way to success. There’s a reason why 100% of successful people failed at some point.
I think this points out how everyone’s best investment is in themselves. And you can’t really diversify you. You can try to be a jack of all trades but very few people succeed without becoming very very good at one fairly narrow field. But as you point out nobody has to figure that out on the first try, I had one of the best young engineers I ever knew working for me, brilliant beyond words. But one day he decided he wanted to be a lawyer. Now he is one of the top intellectual property lawyers in the country and loves what he is doing. Great post!
This post makes sense: we all go in on something. We pick a life partner, and we go all-in on that. We pick a career, and we work at it so we get more compensation over time. And so on.
I think the reason why we can diversify in stocks but much harder in real life is because diversifying in equities is effortless. It’s literally the click of a button and you can get the mathematical properties of lowering your portfolio’s risk while maintaining somewhat the same returns.
But while 2 button clicks can let you invest in the SP 500, you can’t possibly start 500 businesses at the same time to diversify. It’s physically impossible. If human beings were ultra-productive and can do years of work in a single day, then I’d argue it’s worth diversifying because there’s bandwidth to support it. But I think other than that: human beings need to specialize because it’s physically impossible to do it.