When Spreading Your Risk Becomes Unproductive

You may have heard of the saying "don't put all your eggs in one basket" and that you should try to protect yourself against risk by taking out a variety of different insurances - this could be businesses involved in multiple income streams, or perhaps as an individual you have applied for every credit card you can get hold of. The problem is that it gets to a stage where spreading your risk can actually become unproductive.

As an individual if you have applied for too many credit cards you will probably not be able to keep track of all your expenses and re-payments on them properly or it will be very time-consuming to do so. By consolidating your credit cards and bank accounts you will find it easier to keep track of where your money is, what re-payments need to be made and you will generally need to spend less time taking care of your financial affairs.

Also consider your investments, do you have so many investments that you don't know what is happening with each one? Although you do want to spread your portfolio, you should not do so to the extent that it becomes time-consuming and confusing to keep track of. Choose as many investments as you can keep track of and choose these carefully, then ensure that they are continually bringing a good return.

Putting all your eggs in one basket may be a mistake, but so is having many different accounts, investments or streams of income that you are unable to easily control and manage these. If you find that you are taking too much time to organize your financial affairs or analyze your investments then it is time to consider consolidating. Ensure that you have a balance between spreading your risks and also being productive in their management.