Creating Long Term Financial Success
Part 3 – The Power of Passive Residual Income
This
is actually the third post in a series of 5 to cover the
topic creating long term financial success. I think you'll find this series very timely. In previous
posts I explored the question, "Are You Involved in Marketing?" Whether
we worked for a Ford assembly plant or were a pharmacist; whether we
were a plumber, dentist or lawyer, we're all in marketing, we sell our
time or skill for money.
As
I concluded last time I do believe there's a better way and that
business model is Network Marketing. And we started our discussion about
how powerful passive residual income, leverage, and geometric growth
can be when it comes to long term financial security. Today I want to
get into a little more detail about the subject and talk about the first
principle, passive residual income.
Passive
residual income is recurring income that continues to come to you long
after the work you've done to produce it has ended. There's lots of ways
to produce residual income. But many people don't understand it. Others
have never thought about or been exposed to it. And unfortunately, many
ways of producing it are out of reach for 'average' people.
Successful
authors, like J K Rowling of the Harry Potter series, actors, musicians
like Mick Jagger, Madonna or even the estate of Elvis, and insurance
agents are some of the more familiar avocations that produce residual
income. Probably the simplest and best example of passive residual
income is interest earned on money in the bank or other investments. It
gets paid or credited to you without you having to invest any more time
to produce it.
Using
the "virtual millionaire" concept I'll explain, if you had a million
dollars in the bank earning 6% interest, that would produce about
$60,000 of annual income (before taxes). So if you have any source of
passive residual income producing $60,000 or more a year, you are a
"virtual millionaire".
And
with the right business, that can be much easier to accomplish than
trying to overcome all the roadblocks to accumulating a million dollars
in the bank. Instead of Uncle Sam fighting you all the way (taxing all
your income), he actually becomes an active partner by giving you all
kinds of tax breaks and incentives to succeed.
There are only two sources of income:
- Income from PEOPLE AT WORK, and
- Income from MONEY AT WORK...
THAT'S IT!
The
simple goal of Retirement & Financial Planning is to make sure you
accumulate enough money (or income producing assets), so that when you
decide or are forced to retire, it'll produce enough PASSIVE RESIDUAL
INCOME for you to enjoy the lifestyle you choose for as long as you
live.
The
same concept holds true in Network Marketing. Leverage, and Duplication
or Geometric Progression, can help you build it much faster.
Consider
this, "If you had the choice of doing a job and earning $500 once, or
getting paid $100/mo for the rest of your life, which would you choose?"
You'd
be surprised at how many answer $500! These people either, 1) are not
good prospects for taking advantage of these principles or, 2) need some
education. Those who don't understand that principle may never achieve
their true potential.
Obviously
$100/mo. will surpass a 'one time' $500 relatively quickly. And if it
lasts for a few years, or better yet - the rest of your life – it'll
really be a blessing. Producing enough passive residual income can make
you a VIRTUAL MILLIONAIRE in a relatively short time, compared to
working for someone else and scrimping and saving for 30 - 40 years.
A
VIRTUAL MILLIONAIRE is someone who has enough money coming in every
month, WHETHER THEY WORK OR NOT, to support the lifestyle THEY CHOOSE,
for as long as they live. It's also nice to have something SIGNIFICANT
to pass on to your heirs or favorite charity.
But
like everything else in life, even residual income has a downside. The
biggest one is, just like compound interest or geometric progression; it
normally takes a little time for the magic to start working. The POWER
and BEAUTY of residual income is on the back-end, not the front!
Many
people have a hard time understanding this FACT and mistakenly chase
false promises of quick or easy money. That's why there will always be
crooks and con artists in the world pitching "get rich quick and easy".
Successful people ignore them. Naive or greedy people usually get
burned.
Residual
income is NOT about "get rich quick", even though with the right
opportunity it's possible to produce a small fortune in a relatively
short time.
If
you're especially talented or have the time and money to invest, you
may have some success in less than a year. And many people do. But
without a major investment of time or money it takes most 'typical'
people a year or two of part time work to generate a decent income, and
another year or two to really hit the big time. But achieving success
with 2 - 4 years of part-time effort beats the widely accepted
'standard' plan of slaving 20 - 40 years working for someone else to
make them wealthy!
Most
people who fail at network marketing either choose the wrong company or
just gave up too soon and quit because they expect INSTANT results. But
because the real beauty of residual income is on the back end, not the
front, once you build it you have the financial security and time
freedom to do anything you want the rest of your life!
The
RIGHT network marketing opportunity allows anyone, with no prior
experience, special skills, or large capital outlay, to build long term,
passive residual income.
A
critical component to building long term residual income is offering
high quality, high demand, value-priced, 'consumable' products or
services that people use and re-order month after month.
Because
of this simple fact, the top industry in Network Marketing by any
measurable standard is Nutritional Supplements and Personal Care
products. Some people refuse to consider this industry because they
don't take supplements themselves or don't understand the 'Big Picture'
and successful business model of this industry.
Do
you think Burger King and McDonald franchise owners invest hundreds of
thousands of dollars because they like to eat fast food burgers? Not
hardly! They understand human nature and trends in society. We're a
convenience oriented society, and a large part of the population would
rather eat low cost convenience food, even if we know it's not good for
us.
But
there's also a booming trend toward improving your health, improving
your life, and developing personal and time freedom. Many 'opportunity
seekers' completely miss or ignore these trends in society. If your
business is in front of multiple long term trends, you dramatically
increase your chances for success.
I'm
not saying it's not important to believe in and use your own products,
because it is! But for true success you have to recognize major trends
in society, and your products or opportunity must meet ALL the
highlighted criteria above - high quality, high demand, value-priced,
and 'consumable'. (And in this case, 'consumable' does not necessarily
mean just 'edible'. It means used and/or re-ordered on a regular basis.)
And
with the right business the rewards can be much more than just
financial! It's hard to put a price tag on the goose bumps you feel or
tears that come to your eyes sometimes when someone thanks you profusely
for introducing them to a product that has had a major impact on their
health, their life, or their financial situation.
Unfortunately
some people never grasp the importance of this additional benefit. Most
good people want to feel they are doing something worthwhile with their
life. And it's not just about making money, even though many
narrow-minded or greedy people will try to convince you it is. It's also
about helping others. And doing both can make the right business doubly
rewarding!
But
your business also has to have profit potential. Some 'price-based'
products or services have lots of competition and limited profit
potential. If you choose a business like that you have to do a lot more
volume and it's hard to build loyalty, which is an important element in
producing long term passive residual income.
On
my next post we'll continue with how powerful passive residual
income, leverage, and geometric growth can be when it comes to long term
financial security as we discuss leverage.