Blog post on a balanced life

This post, titled "Balance Life through Mental Portfolio" is yet another example of why I am such a fan of Donald Latumahina and his blog, Life Optimizer.

Here is an excerpt:

" Looking at my life, one major cause is the unbalance state of our mental portfolio.

Let’s compare it with investing. In investing, you have an investment portfolio which comprises of many types of investments. Your portfolio may consist of large-cap stocks, small-cap stocks, bonds, and other types of investment. It becomes unbalanced when one (or two) type of investments become disproportionately high. Let’s say that 90% of your portfolio consists of small-cap stocks. In such a situation, the performance of your portfolio is very much determined by the performance of small-cap stocks. If they perform well, your entire portfolio will perform well. But if they aren’t, your entire portfolio will suffer.

In investing, such an unbalanced portfolio is not recommended. Why? Because a single bad event could ruin your portfolio. That’s why one important advice is not to put all your eggs in one basket. You should diversify your portfolio. For example, if you have four types of investment, you may aim to own 25% of each. This way, when something bad happens to one type of investment, the rest of the portfolio can act as a cushion that minimizes the impact. Your investment will have much more stable performance this way..." (read the rest here)