Creating Long Term Financial Success
Part 3 – The Power of Passive Residual Income
This is actually the third post in a series of 5 blog posts to cover the topic creating long term financial success but with the New Year upon us and with improving ones financial situation being one of the biggest resolutions 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:
1) Income from PEOPLE AT WORK, and 2) Income from MONEY AT WORK…
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 blog 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. If you are watching the video version blogs on YouTube or some other site then I encourage you to visit my blog http://KeithAbell.info and take a look at the summaries that go along with the video blog.
Keith Abell, RPh CIP MI