Always adjust your investments to your situation in life

General advice will only work so far. I tend to say a lot of “always do this” and “never do that” on this site, but in the end, what do I really know about your specific circumstances? Please take my advice with a grain of salt and employ your best judgment.

your situationFor instance, I often advocate not putting all your eggs in one basket. However, I do understand that there are situations where the one-basket approach is actually the one that makes the most sense.

Example:

Isabel is 26 years old and is offered a great job position in the big city. However, finding somewhere to live within a reasonable commuting distance proves exceedingly difficult, unless she buys a home for herself. Buying a home would mean that she would pool all her financial resources into the down-payment, and then make a rather hefty payment to the mortgage company each month that would cumber her ability to make other investments. She would, in essence, put all her eggs into her home.

Instead of point blanc advising Isabel to refrain from this, I would suggest she took a good look at the whole situation. Is the job paying enough for her to at least scrape together an emergency fund after the purchase of her home? What’s the predicted career trajectory? Is she thinking of buying a house (where maintenance can be costly and capricious) or a condo where the cost of maintenance is predictable? What are her other career options? Would she be willing to have a house mate to free up more money for saving and making alternative investments? And so on. In some situations, taking a person’s whole situation into account, putting all – or almost all – of the eggs in one basket isn’t necessarily a foolish decision.