Diversifying One's Career

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Tortoise
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Diversifying One's Career

Post by Tortoise » Wed Feb 01, 2012 12:25 pm

I can't recall if this has ever been discussed here specifically, but I am interested in the relationship between Rules #1 and #10 from HB's rules of financial safety.

Rule #1: Your career provides your wealth.

Rule #10: Don’t depend on any one investment, institution, or person for your safety.

We usually discuss Rule #10 in the context of diversifying one's investments, but in light of Rule #1, it seems like one should also consider diversifying one's career.

For most people, their career is the source of the majority of their income. Yet most people's careers are decidedly undiversified in the sense that they are "all-or-nothing": either they have a job, or they don't. They are employed by someone else and thus depend on that single person, company, or organization for their income stream. The dangers of this all-or-nothing situation become especially evident during economic downturns, when the unemployment rate increases.

It seems like diversifying the income stream from one's career requires either working for oneself (and serving multiple customers) or working for multiple employers simultaneously. In other words, either self-employment or consulting/freelance work for multiple customers. However, the interesting thing is that a job with a single employer has traditionally been referred to as a "safer" and more stable form of employment than self-employment or consulting/freelance work.

In a world with black swans and fat tails, maybe we need to think more carefully about this notion of the supposed safety of a steady paycheck from a single employer?
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Re: Diversifying One's Career

Post by shoestring » Wed Feb 01, 2012 1:04 pm

I've been thinking about this lately, as in for four years or so now.  Here's what I've done:  I identify the most transferable skill I can get wherever I am currently at.  I just once in a blue moon go read what people are hiring for in the same industry that I have the opportunity to do where I am.  Right now for me that's doing A-133 audits.  In a prior job it was operating forklifts.

It has kind of worked, the longest employment gap I ever had was 6 months.  It has kind of not worked, I've spent most of my adult life underemployed and this has cost me dearly, or at least I could say it has if we lived in Fantasy World where everyone gets their perfect opportunity all the time!

The trick seems to be to specialize, because most of us only have one skill set that pays anything, but try not to specialize too much.

The thing is, ideally I would be viable in multiple widely disparate lucrative things simultaneously.  The problem is I'm not that talented.  I'm viable as an auditor, that's pretty decent, the trouble is if I think about other things I can do that have nothing to do with that job as an auditor, I'm only really viable in a bunch of service jobs otherwise.  Which one pays more?

But if you narrow it down, I'm a credible hire for other accounting jobs.  That's not as idea, those two things are more similar than say being a viable doctor and attorney simultaneously, but I have to live with what I can do.

My father laid out the pattern for me.  He was a viable, licensed professional engineer.  And then somewhere along the way he became experienced at running power cooperatives and consulting firms specializing in rural power.  Those are different things, but it's ultimately the same industry.  However at any point in there, after about ten years, he was a viable engineer and a viable management hire.

Right now I'm working on some certifications that might allow me to transition to another role besides auditor in the same organization.  Even if I get fired or laid off, I might find more options afterward this way.  It's a start.

Now my mother went from being a dietician to an educator.  The trouble is, she had to completely start over again and was never viable as both at once.  IF you can be two things at once, even if they aren't that far apart, that seems to be the trick.
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Re: Diversifying One's Career

Post by Freedom_Found » Wed Feb 01, 2012 2:57 pm

I have a small business, with over 30,000 customers over the last decade. All separate and unique sources of income. Does that count?
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Re: Diversifying One's Career

Post by TripleB » Wed Feb 01, 2012 6:40 pm

Freedom_Found wrote: I have a small business, with over 30,000 customers over the last decade. All separate and unique sources of income. Does that count?
It doesn't count if they are all buying the same thing. i.e. if you sold Fax machines, then you might be in trouble.
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Re: Diversifying One's Career

Post by One day at a time » Thu Feb 02, 2012 1:03 am

This is a topic I've thought a lot about as well.  I would only add that another way to see it is how one can reduce his or her dependence on money.  That is, having mechanical, gardening, and other self sufficient skills is another worthwhile way to think about this issue.  Personally, I don't have the time at this point to develop or sustain another career skill, but I do have the ability to pick up these other self sufficient skills that could buy me a lot more time to re-train, etc.  In other words, if you can reduce your living expenses enough, the less money you need, which opens up a more diverse set of work opportunities...something like that.  Just my two cents.
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Re: Diversifying One's Career

Post by Tyler » Thu Feb 02, 2012 1:22 am

Personally, I think diversifying your career is less about having multiple jobs than it is about having a diverse skillset within your area of expertise and minimizing your counter-party risk.

Your skills are your personal portfolio.  You want to make sure your skills are diverse, properly balanced, and up-to date on current trends in your field.  Just like rebalancing your portfolio, it's a good practice to once a year put together a resume to get a feel for how you would sell yourself to another potential employer should it come to that.  If you find yourself too weighted to a specialty that only your current employer would appreciate (expertise in a niche product or software, too much time spent on internal processes, too much focus on one specific detail in general, etc.) then make a plan to rebalance your portfolio and make yourself more well-rounded.  Take a class or seek out different job roles -- actively make yourself more marketable in your field.  The last thing you want is to be fully invested in only one fund and have that particular market/company crash unexpectedly.  

If you can have a totally unrelated skill to fall back on in any job economy (carpentry, fixing cars, etc) if the SHTF, that's like investing in physical gold.  Good for you.  ;D
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Re: Diversifying One's Career

Post by Tortoise » Thu Feb 02, 2012 3:40 am

Good stuff. I like the analogy of hands-on skills being like an investment in physical gold. Never thought about it like that.

One of the themes in this thread so far seems to be that it's good to specialize somewhat--since we need to be able to stand out from the crowd--but not so much that it starts to backfire and reduce our marketability. The trick, I suppose, is finding that sweet spot.

Maybe one could say that one's career is more like a VP than a PP in the sense that it is necessarily focused ("overweighted") in one or two areas by necessity. So it's kind of interesting that in HB's series of rules stressing the importance of the PP mindset in preserving wealth, the very first rule tells us that our wealth ultimately comes from a VP of sorts--our career.
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Re: Diversifying One's Career

Post by Tyler » Thu Feb 02, 2012 10:51 am

Well, the human brain doesn't allow broad index funds when it comes to skills.  At some point you do have to do some stock picking.  Just don't put all your money in one stock, and try not to marry yourself to one narrow industry if you can help it.  ;)
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Re: Diversifying One's Career

Post by moda0306 » Thu Feb 02, 2012 10:59 am

Tyler,

Are you in the Medium Tex School of Witty Analogies?
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."

- Thomas Paine
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Re: Diversifying One's Career

Post by Tyler » Thu Feb 02, 2012 11:07 am

Lol.  Just on a roll.  Better stop while I'm ahead.
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Re: Diversifying One's Career

Post by MediumTex » Thu Feb 02, 2012 12:57 pm

As some of you know, I have a part-time carpet cleaning business.

I find that this work allows me to get paid to get a good physical workout, helps me get to know members of my community I never would have met otherwise, and it allows me to engage in a relatively simple task that gives my mind a nice break from the tedious, frustrating and difficult mental work I do during the day.

When I first announced my intentions in this area, everyone I knew said I was crazy.  Today, over two years later...everyone still says I'm crazy, but it has worked out well for me.
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Re: Diversifying One's Career

Post by Freedom_Found » Thu Feb 02, 2012 4:48 pm

TripleB wrote:
Freedom_Found wrote: I have a small business, with over 30,000 customers over the last decade. All separate and unique sources of income. Does that count?
It doesn't count if they are all buying the same thing. i.e. if you sold Fax machines, then you might be in trouble.
Fax machines are still pretty well used in the business world. We fax PO's to suppliers, invoices to customers, etc all the time.
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