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Rebalancing Your Portfolio Life

Have you ever fantasized about your great escape?

Have you ever fantasized about your great escape? You know, the stressful job, the daily grind, the loveless marriage. What if you made a break for it and actually got all the way to the land of plenty only to find that it wasn’t what you really wanted? That’s exactly what I’ve done a couple of times in my life before I learned that the same mindset that drives a person to have it all eventually stops them from having what they really want.

I retired at twenty-nine. I was exhausted. I had been running full out for a decade. A marginal student from a blue collar neighborhood in Michigan, I worked my way through three degrees in six years as a Teamster. I got married at twenty-three and put her through college, as well as the tornado that was my life. At twenty-five, I turned my back on a professorship at a top university to go to work as an executive at a regional pizza company. Four years and three billion dollars later it was time to leave Domino’s Pizza, and my marriage. Only problem was that I had a beautiful baby girl that arrived the previous year. A single daddy, I retired at twenty-nine in search of simplicity, solitude, and solace. I found them all, but found them all wanting.

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My daughter and I moved into a small house on the old west side that I purchased from my mentor, a famous intellectual. It was something out of a fairytale: Vivid colors, secret cupboards and passageways everywhere, and adjacent to a pretty little park right out of Mary Poppins. We sang songs, read rhyming books, and went on magical adventures. Sure the meals were mediocre, the laundry a chemistry experiment gone wrong and our personal appearance merely adequate, but we managed. During these four years I read every self-help book ever written, played my guitars incessantly and even learned to meditate. My social life was a patchwork of yoga instructors, performance artists, and earth mothers. I smelled like patchouli and sandalwood. This was a life I wanted?

My soothing daily routines began to bore and annoy me. How much mindfulness could I really stand? I felt like my new ideal life was sliding into a tranquil state of navel gazing. How could I have fooled myself into believing that I could go from doing deals around the world to doing tea around the corner without getting altitude sickness? It wasn’t that I failed at making my dreams come true, rather it was that I succeeded only to find that weren’t my real dreams at all.

It’s not just me. It’s you too. You might be that doctor who retired to their condo in Florida only to boomerang back into a medical practice because fishing and golf just wasn’t enough for you. Maybe it’s your twenty-five year old kid who only three years ago finished their hitch with the Peace Corps and is now back in school getting their MBA. Perhaps your spouse is flirting with an old entrepreneurial dream that he never really got over and is considering chucking his career to rekindle his desire to work.

The challenge is that everything in this world costs something. The fact is most of us want what we don’t possess now but fail to consider what we must give up to get it. It’s not that we can’t have it all. In fact, we can. It’s the cost of having it all that we are unwilling to acknowledge.  Our capacity is bound by time and resources. Are you the only person you know who is overbooked? It’s easy to start new things. It’s hard to stop old things because they represent our commitments and sense of duty to those we love. It’s not just about you. We live in families and communities where our changes ultimately become theirs.

Like a windshield wiper, I had gone from one side to the other; from brashly pursuing goals to quietly searching for harmony. Quite by coincidence, the next stage of my life started with an intriguing discussion I had with my financial advisor. We were going over my portfolio of investments when we spontaneously began to talk about them as if they represented parts of my life. High risk, high reward investments in startup biotech firms made me think about a new business I had long considered starting. Blue chips stocks with consistent returns suggested to me that I too needed to commit to daily discipline in areas of my life like exercise. Giving money to my alma mater reminded me how much I missed being part of a teaching community. The detail research required to manage treasuries and bonds brought to mind the need to stay current by reading journals in my field of expertise.

We talked about how my investments were a work in progress just like me. Over time what I needed would change as my daughter grew up and went to college. In essence, I started to look at my investments as a series of cycles that closely resembled the seasons of my life. Maybe I could have it all, but just not all at once. More importantly, having it all would require me to constantly rebalance my portfolio life. This would keep me from moving from one extreme to the other.

So what exactly went into the portfolio of my life? I came to refer to these four types of life investments as the 4C’s:

1. CREATE
Seek: Creativity
•    How: Aesthetic vision and artistic expression
•    Example: Keep a sketch book of creative ideas

Seek: Discovery
•    How:  Psychological and spiritual exploration
•    Example: Visit the holy places of a different religion

2. COMPETE
Seek: Vitality
•    How: Physical and emotional health
•    Example: Keep an appointment with yourself to meditate daily

Seek: Prosperity
•    How: Financial well being
•    Example: Actively manage your financial investments

3. COLLABORATE
Seek: Capability
•    How: Learning and intellectual development
•    Example: Enroll in a continuing education course

Seek: Community
•    How: Connection with family and friends
•    Example: Go on a family camping trip

4. CONTROL
Seek: Security
•    How: Safety and savings
•    Example: Keep a cash jar for family emergencies

Seek: Productivity
•    How: Accomplishment and advancement
•    Example: Volunteer for an important career enhancing project

In order to create a specific type of result, I first needed to create the ability to achieve it. For example, if I wanted to lose weight, I first needed to develop better eating habits and make time for daily exercise. In this way, the means create the ends.

There are really only four decisions you can make about your portfolio life:

  1. Start something new
  2. Stop something old
  3. Modify what you have now
  4. Hold or maintain what you have now

The key is to reallocate your resources, time, and energy according to what you really seek now. While stopping the old is the hardest of all the decisions, it is the most important because it makes room for the new. Remember that the world around us greatly enables or inhibits our decisions so pay attention to which way the proverbial wind is blowing.

Like any portfolio, I realize that I need to continually rebalance my life to reflect what I believe I really want at any given time. This means that I may pursue very different types of outcomes in various areas of my life. For example, I may seek to CREATE by traveling to Bhutan, one of the few places I’ve never been to, while also seeking to CONTROL by moving some of my investments out of the volatile market and into a savings account. Over time, you will recognize a rhythm to these patterns in your life.

I sometimes feel like I’m Forrest Gump. But being in the right place at the right time is a matter of both luck and readiness. My story goes on but this time with a diversified portfolio. I married a lovely woman and we have two children together.  I became a professor and built a successful business. I even found time to write a few books. We are now a portfolio family. Some weeks it’s about the kids: Karate, violin, catechism and the like. Some weeks it’s about the career: Travel to clients, lectures, academic papers and so on. Every Sunday my wife and I talk about our portfolio life. We shift things around, create hybrid solutions and connect a lot of dots. With a little luck, most of the time our portfolio is reasonably balanced and for that we are grateful.

Imagine if your dreams came true the day you graduated from high school: The bright lights of Broadway, a fast car, married to the beautiful homecoming queen, or whatever. Would you still be happy today? While some are, many of us have outgrown our early dreams and have new ones to pull us forward. So while you’re planning for your way to the future, why not leave a little room for the things you don’t now? Diversify your portfolio life to hedge against unforeseen challenges and give yourself the freedom to pursue emerging opportunities. That way you can have it all…when you really want to have it.

 

Jeff DeGraff, Ph.D., is a professor at University of Michigan's Ross School of Business.

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