Diversification Is…

Tyler Linsten Investing, Personal Finance

Doing the laundry.

Taking out the garbage.

Taking your medicine.

Feeding your dog.

Feeding your young child.

Stopping at the stop sign when nobody’s at the intersection.

Paying your car insurance premium.

Taking your vitamins.

Visiting the doctor once a year, every year.

Visiting the dentist twice a year, every year.

Visiting your in-laws.

Mowing the lawn.

Brushing your teeth.

Taking notes when you think you know the content.

Letting that guy merge on the freeway.

Eating a salad instead of a burger.

Changing the toilet paper roll.

Doing the dishes right after dinner.

Paying attention in the safety meeting.

Calling your grandmother.

Sweeping the sidewalk in front of your house.

Holding the door open on a bad day.

Checking your tire pressure.


What was the point of that, you ask? Diversification is another thankless task, just like all the others above. Just hang with me on this.

There exists a Future You and many, if not most of the activities you undertake every day in present time have a direct effect on Future You. Pretend Future You is somebody who just invisibly observes you all day, every day. You’re the only person he/she has.

Future You is lying in the tall grass, hoping you diversify.

Future You is lying in the tall grass, hoping you diversify.

With every thankless task, like the “boring” notion of making sure your portfolio is spread among multiple asset classes with low correlation – otherwise known as diversifying – your Future You gives you a small pat on the back because those tasks mean the world to him/her. Future You is completely depending on what you do today, especially when it comes to investing to meet your future goals. Future You is retired and does not have a job.

It sure doesn’t feel great to pay your car insurance premium every month, especially when you have yet to see any tangible benefit since you began the policy. But when Future You gets t-boned by an uninsured motorist, Future You is going to be very thankful you paid up for full coverage.

The same goes for your doctor visits, the vitamins you take and the other daily tasks extending to the other lives you interact with. Like all of these tasks, diversification is just something you absolutely have to do – no matter how big of a waste it seems in the present. It is foregoing something shiny today for something dull for many years. You’re never going to beat the hottest stocks or outperform every index with your boring (and smart) portfolio, but Future You depends on you to spread out the risks you take because you’re the only one who can help him/her thrive.  You absolutely can’t blow this for Future You.

It’s intriguing to pile your money into one stock or one asset class – but I promise you that it won’t work out in the end, no matter how good the prospects look today. So just take your medicine now. Why risk it?

After all, someday you inherit the sum of these choices when you become Future You.