Redundancy is having more than one means of completing a given task. In other words, redundancy refers to the process of adding ‘extra’ copies of critical components of a system so that you can use the copy if the original one fails or it’s lost. Spare tyre in your vehicle, power backup generator sets in your apartment, fire exits in your office building, etc., are all typical examples of redundancy designs. Big software companies like Facebook, Google, Twitter or even large banks - go as far as having multiple copies of their servers spread across continents. Which means even large scale catastrophic events won’t cause irreversible damage. Redundancy comes with a cost because you have to pay for maintaining these extra spare copies and it increases inefficiency but that’s the price you have to pay for protecting your downside. Having a diversified investment portfolio is way of practicing redundancy. You don’t want to leave your portfolio at the mercy of one or two stocks. Having multiple good quality stocks in the portfolio covers your downside. If you found this video useful, you may want to subscribe to Safal Niveshak's newsletter. www.safalniveshak.com For more details on investing and redundancy, read - http://www.safalniveshak.com/latticework-mental-models-redundancy/ Download the transcript of this video - http://bit.ly/2i5dLwb Download the audio(mp3) of this video - https://soundcloud.com/safalniveshak/investing-and-redundancy
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