Yesterday, I (Kim Iskyan) shared the story of my friend and former colleague Andrei.
In the mid-1990s, during a Russian economic crisis, Andrei fell victim to a common mistake... Thinking his portfolio was better diversified than was actually the case.
While Andrei split his financial assets between stocks, bonds, real estate, and cash, they were all held in Russia. And his "personal assets" weren't in much better shape. He grew up in Russia, was educated in Russia, and worked in Russia. And most of his professional and personal connections were Russian.
So when the Russian economic crisis hit in 1998, the value of Andrei's financial and personal assets plummeted.
But Andrei learned from his mistake. After the crisis, he understood that his assets were far too concentrated in Russia. So in the following years, he got to work diversifying his personal assets.
Andrei went to England for business school and worked in London for a few years. His English improved dramatically – as did earnings power, network, and professional opportunities outside of Russia. Later, he moved back to Russia but continued to have one foot in the U.K. He recently told me that he's in the process of applying for citizenship there.
What's more, Andrei is intent on ensuring that his kids don't suffer the same sort of asset concentration that he did... He's planning to send his teenage kids to school in England to give them exposure to the rest of the world – and to help them boost their personal assets at a young age.
What Andrei's story tells us is that no matter where you are, diversifying your personal assets is at least as important as diversifying your financial assets. (I've written previously about internationally diversifying your investment portfolio and your currency and banking exposure.)
Maybe you're not at the stage in life where you can take the sorts of steps I'm suggesting below to diversify your personal asset base. But it may be something that your kids – or their kids – can explore and discover... as part of building up and diversifying their own personal assets.
1. Live abroad
There's no better way to expand your life experience in every way imaginable than by living outside of your home country. You become more aware of the different ways that people live and of their motivations and expectations... You learn how to navigate new situations, people, and experiences... You improve your flexibility with respect to what you need to be content and satisfied...
Some of it might be difficult and uncomfortable – and you may come to appreciate home all the more. But you'll be a more balanced and broad-minded person for living elsewhere. And the relationships you develop and the challenges you overcome will go a long way toward expanding your personal asset base.
Living somewhere else doesn't have to be forever – or even for all that long. Spend three months in an Airbnb in a faraway place, whether it's Buenos Aires or Bangkok... get to know the neighborhood... meet people... take some language classes (see below)... learn about the history of the country and its people... and walk everywhere you go. You'll come back a richer person, and your personal asset base will be more solid.
If you're not ready to live in a foreign country, traveling abroad is a good start... and during COVID-19, it's actually a better time to get away than you might imagine. But being a tourist doesn't hold a candle to spending an extended period of time in a different culture.
2. Learn a new language
Learning a language is good for your brain: It increases brain connectivity and the actual volume and density of gray matter. And for older people, it can also boost the working memory.
Aside from the brain benefits, though, learning a new language can change the way you think. To a degree that's difficult to conceive of if you speak only one language, the language that you speak plays a huge role in shaping your thought process, prioritizing actions and consequences, and framing the world. As Science magazine explained in an article in 2015...
Language can prompt speakers to pay attention to certain features of the world. Russian speakers are faster to distinguish shades of blue than English speakers, for example. And Japanese speakers tend to group objects by material rather than shape, whereas Koreans focus on how tightly objects fit together.
Learning a new language makes your brain – your most important personal asset – bigger. And then, of course, there are the more practical benefits of learning another language, including professional opportunities and showing that you're broad-minded and able to learn new fields.
The best way to learn a new language is to spend time in another country. In the meantime – or at the same time – there are lots of great apps that can help you, like Fluent Forever (my personal favorite) or Babbel... and lots of speaking lessons on Spotify. To get live, private virtual lessons over Skype with a native speaker, check out italki.
3. Get another citizenship
As I recently wrote, a second passport opens up new horizons for where you can live, work, travel, own property, study, open a bank account, and much more. It's the ultimate personal asset.
A passport from one country generally doesn't allow you to live for more than a few months in other countries. But logistical and regulatory barriers to working abroad magically vanish if you hold a local passport.
And in the COVID-19 world, many countries have barred citizens of other nations from crossing their borders... but only in a handful of cases have governments prevented their own citizens from coming home. Many governments have circled the wagons against the coronavirus, and everyone but their own citizens are on the outside. It's a very valuable thing to be on the "inside" of more than one country.
Living in another country, learning a new language, and getting a different passport are just the beginning of diversifying your personal assets. By themselves, they won't help much to increase their value. The next step is to cultivate the relationships you've started elsewhere... improve your language skills... and use your passports to your maximum advantage.
Andrei learned the hard way. But you – and your loved ones – don't have to.