The Bible Says to Diversify Your Sources of Income

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Here's an interesting verse I recently found in Ecclesiastes 11:6:

Plant your seed in the morning and keep busy all afternoon, for you don’t know if profit will come from one activity or another—or maybe both.

To me, this verse says that we all need to diversify our sources of income because we don't know which one will do well.

This is particularly true for a business, which is why you see many companies offering multiple products (some will sell well, others will not.) Having worked in the music business a long time ago, I know it for a fact that "you don’t know if profit will come from one activity or another". We'd release several records each year and some would fail while others would succeed -- but we could never tell in advance which would be the profitable releases (unless it was from a proven artist.)

It's a bit harder to apply this principle to an individual since we all usually have just one career. That said, there are things we can do to diversify our overall sources of income:

• As for your career, make yourself as marketable as possible so if one industry/company does not do well (like the automobile industry), you can move to another (like retail.) I've personally worked in consumer goods, food, retail, music, and the web in my career. At times, some fell out of favor, but because my skills were marketable to many industries, I was able to grow my career (and salary), not take a step backwards.
• You can concentrate on developing "multiple streams of income." If you want to make money outside your job, check out 11 Great Ways to Earn More Money, 20 Ways to Make More Money, and Eight Unusual Ways to Create Cash.  
• Of course, this principle certainly applies to your investments. You need to diversify, diversify, diversify because, as we all know, asset classes don't move up and down in lock-step. Some go up, and some go down. A year later, others go up and some others go down. No one knows which ones will perform in advance. So you invest in many asset classes -- with an asset allocation that makes sense for you.

I’m sure there are more. Anyone have any to add?

So how about you? Have you diversified your sources of income?

Comments

[Stan Sloan]

One way to diversify or have an extra income is to monetize your hobby or skill. There are plenty of ways of how to have an extra income based on your skill like you can do some consulting services if you are a professional or if you have some troubleshooting skills, start a repair shop.

[Sharon]

Thanks for writing this article it spoke tons to me. :)

[Tim]

The first two verses of Ecclesiastes also speak to that same point regarding investing:

"Ship your grain across the sea; after many days you may receive a return. Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land."

Diversification is biblical! One of many reasons I invest in index funds... :)