Diversification

“Don’t leave all your eggs in one basket” is a common saying, but there is a lot of deeper meaning behind it. The concept of diversification is a powerful one, and one that can be applied to many things in life. Spreading risk and avoiding reliance on single factors is a very important way to live a stable and healthy life.  Life inherently involves volatility; Some days everything is going your way and the next nothing is going your way. As a student of Economics and Finance, one of the most important ways to thrive through the ups and downs of life is through diversification. 

For example, when making large decisions (which almost always involves some level of risk) it is always important to have a backup. Or even better: many backups. When applying to schools, have many options. When buying a new car, have many options. When making friends, try to have many options. That way, in case one fails, you have many others to rely on. Sometimes it is easy to get super fixed on one goal, revolving your life around it and failing to consider the possibility that it might not work out. Should it fail in this case, everything fails because you put everything into it. But with a diversification of options, some of your other options will thrive as some others fail. 

Obviously, this is a very broad concept when applied this way. Knowing how much diversification is needed is subjective and also requires analysis of the risk levels of each option. In terms of investing, this can be quantified, but in terms of life it is often extremely hard to quantify. However, it is still an important and easily applicable concept that can stabilize the most volatile/risky parts of life.