7. Self-Esteem Diversification

Ray Dalio is one of the world’s richest investors.

According to the Google search I just did, he's worth 16.9 Billion US Dollars. That's pretty good going.

So, it's fairly safe to say the guy knows a thing or two about investing. And one of his key investment principles is around the importance of product diversification.

He states that "diversifying well is the most important thing you need to do in order to invest well”.

If we spread our investments across a range of different asset classes, sectors, currencies and countries, this improves our return to risk ratio - basically, the more different things we put our money into, the less risky our overall investment is.

In contrast, if we put all of our money into one thing and it fails, then we’d be buggered.

To visualise this, let's pretend we're a world-famous egg collector (#goals, right!?). As a world-famous egg collector, we naturally own 100 different eggs. We're also, of course, the proud owner of 100 different baskets.

Now, let's say we placed each one of our eggs in each one of our baskets... In this Ray Dalio-esque move, if we lost one of our baskets it wouldn't really be a big deal, as we'd still have 99% of our eggs.

On the flip side, if we hadn't diversified (diversi-fried?) our eggs and placed them all into that one lost basket, we'd have blown the lot! In fact, I think there’s even a saying about that...

However, I'm not trying to teach you how to suck eggs, and please don't worry, I’m not going to crack out a line like “we should treat our lives like an investment” as I appreciate you’d probably be a little bit sick in your mouth.

Having said this, there are elements to Mr Dalio’s investment philosophy that I reckon could be applicable when it comes to managing our mental health.

As we all know, there are quite a few different areas that affect the quality of our life - our health, our emotions, our thoughts, our relationships, our finances, our independence, our career, our environment and how we use our time. Probably more, but broadly there's a range of things that have an impact on our overall wellbeing.

And I reckon that we can potentially cause ourselves a fair amount of distress and unhappiness if we place too much emphasis on just one of those areas.

If there's one area in life on which we place a disproportionate amount of our identity and self-esteem, then (per the eggs-hilarating scenarios above) this can make us pretty emotionally vulnerable if shit hits the fan in that area.

A few examples to showcase this:

• An overly career-driven professional gets overlooked for a promotion.

• A social media obsessive’s post doesn’t get many likes.

• A fitness fanatic slips a disk in their back.

Obviously, none of these outcomes are ideal. Though if we overemphasise the importance of these specific areas, then these 'setbacks' will be far more devastating than if we have a wider range of things that we genuinely value.

And if we do have a wider range of things on which we base our self-esteem, then this can soften the blow if (slash when) our world crumbles in one area.

To go back to the investment analogy, by placing our sense of self-worth on a wider range of things, we essentially diversify our self-esteem, and can make ourselves more robust to challenges, setbacks, insecurities, and all that fun stuff. Absolute classic risk mitigation!

So without wanting to over-egg the point, it may be worth having a think about. Do we possibly place too much emphasis in one area of our lives that’s causing us unrest?

If you're anything like me, then the answer can often be yes. If so, it might be a shout to have a think about other areas in our lives that are going a bit better, and remembering (and valuing!) those.

And not putting all of our eggs in one basket.