If you would like to have a deeply satisfying life, do what you love.
However, contrary to what some people say, doing what you love does not automatically mean you will have a financially successful life.
To have a financially successful life, do what others value and are willing to pay for.
If you want a deeply satisfying AND financially successful life, do what you love that happens to be what others value and are willing to pay for.
These guidelines to life are pretty simple.
Here’s where things get more subtle and interesting.
If what you love to do does not happen to be what others value, what can you do?
Enter the world of stock market portfolio theory.
Yes… portfolio theory.
If you’re not familiar with the term, the term comes from Wall Street. It refers to a situation where an investor is looking for a particular kind of risk vs. return profile but can’t find it.
For example, maybe an investor is looking for the upside potential of an Amazon but some more stability like an IBM. Perhaps a stock with these specific characteristics does not exist.
So what should an investor do?
What Wall Street figured out many years ago is if a single investment doesn’t give you the risk/return profile you seek, sometimes taking a mix or portfolio of stocks can give you what you want.
For example if a stock portfolio of 100% Amazon stock or 100% IBM stock doesn’t give you a risk/reward profile you want, maybe a portfolio of 70% Amazon and 30% IBM might.
The same principle applies to managing your career.
Maybe you love to sing as I do. Perhaps you’ve done a realistic assessment of your skills and realize, like I have, that your skill level isn’t high enough to earn a good living from your passion.
Should you give it up entirely?
Just take a portfolio approach.
Find another career that’s in demand by others, and have that be the majority, but not 100% of your career “portfolio.”
Maybe it’s 70% vs. 30%, or 90% vs. 10% portfolio allocation.
From a portfolio theory stand point, you can pick any mix you want to get the specific kind of “performance” from your career investment portfolio.
There are two practical considerations to keep in mind when using career portfolio theory.
First, some professions are so incredibly demanding that it’s not possible to have anything else in the portfolio. Management consulting, particularly at the top few firms, is one such career. When you’re a consultant, the job is not just 100% of your career portfolio; it is often 125% of your ideal time devoted to career.
Investment banking is another such profession.
However, these two more popular business professions probably represent less than 1% of all possible business jobs in the world. It just happens that they the ones most visible, and thus most talked about, on elite college campuses around the world.
As you look ahead at your career options, it’s useful to apply a portfolio theory lens to your career choices.
It’s okay to do things that aren’t very profitable, or perhaps not profitable at all.
Several years ago, CaseInterview.com was my passion project — probably a complete waste of time financially, but really fun to work on. So it entered my career portfolio originally at 1% to 5% of my time annually.
As you might imagine, portfolio allocations change over time. These days I do spend much more than 1% of my time annually on CaseInterview.com.
At the same time, I have another project I am super passionate about. It’s not focused on business at all. I can’t see how it can possibly earn any money at all, but I’m really excited about doing it. It will be my new 1% project in late 2015.
What’s significant about these 1% (or whatever % works for you) passion projects is that even though they take up only 1% of my time, it may end up contributing to 50% to 70% of the satisfaction in my life.
Using more finance concepts, this is an incredibly good Return on Investment (ROI). This is true even if you invest for both income AND life satisfaction.
What are the 1% passion projects in your career?