Each month I sit on a panel at the US Air Force Academy where soldiers, sailors, and airmen are preparing for life as civilians. Around the room are flip chart pages that list the things these separating officers and enlisted folks want from their future employment. Always near the top of the list is job security.
My father worked for the same employer for most of his adult life. Well, that simply is not the case in today’s world. The underpinning of income risk from a single job has changed. No longer is a job with an employer the most risk-free way to earn a living.
The job security landscape has changed. Today, corporate jobs are often riskier than being self-employed in a micro business.
Micro businesses often have many customers. When one of the customers falls on hard times and is forced to terminate their contract, the micro business has other customers that can often pick up the slack.
While many people have become rich by focusing their investments on a single business or stock, such actions are considered risky in the world of investing. Financial advisers recommend that rather than concentrating your investments in one area, you diversify your portfolio to reduce risk. This same philosophy holds true for income sources. Having many smaller income streams is much less risky than getting all your income from a single source, your job.
What is your level of income risk?
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