How to build ur Wealth Part 3

Diversify your 'personal equity.'
The idea behind diversification is simple. If you keep all of your eggs in one basket, you're setting yourself up for big losses – and possible disaster. However, if you spread your risk across different types of assets, your other holdings will help balance out the losses.

But diversification goes beyond just holding a number of different assets... What about your "personal equity"? Is it diversified?

Here's what I mean... First, add up the value of everything you own, like stocks and stamp collections and your home. Then, subtract what you owe (on your mortgage, to the taxman, or to your ex-spouse, for example). What's left is your net worth, or your equity.

When I say "personal equity," I'm talking about a broader definition of your assets. It includes everything from financial, personal, and professional experience to your prospects and earnings power. Personal equity measures how you're going to build your equity in the future.

To diversify your personal equity, think about where you'll be earning your living and how you'll be adding to your savings in coming years. Where is your paycheck coming from? What other sources of income do you have? Where is your professional network – and how strong is it? How transferable are your skills? How many languages do you speak – and how easily could you work in a different country?

If you're not already diversified in these areas, start now.