The Key to Wealth
The Key
That's it. As simple as that. If you manage to have multiple streams of passive income, you will have both time and money, hence great wealth.
The rest of this page will explain what true wealth is and give ideas of how to get there.
What Is True Wealth?
The dictionary definition of wealth is:- a great quantity or store of money, valuable possessions, property, or other riches:the wealth of a city.
- an abundance or profusion of anything; plentiful amount:a wealth of imagery.
- Economics.
- all things that have a monetary or exchange value.
- anything that has utility and is capable of being appropriated or exchanged.
- rich or valuable contents or produce: the wealth of the soil.
- the state of being rich; prosperity; affluence: persons of wealth and standing.
- Obsolete. happiness.
The greatest amount of money or possessions means nothing, if the price you've paid to accumulate your wealth was too high, i.e. you're suffereing from stress-induced diseases, your relationship with your wife and children is non-existent, etc. You get the picture.
The wealth we are talking about here is abundance in all areas of your life: Finance, Health, Relationships, Creativity and Spirituality. It is important that your life is balanced in all areas. Life in balance is a happy life.
Time is the key to a balanced life: If you have time, you can further all areas of your life. But most of us are so busy making a living that there is no time left to have a life.
Where are you in each area?
Active vs. Passive Income
If you haven't already read it, Robert T. Kiyosaki's book Cashflow Quadrant gives a great explanation of the different ways of making money:Active as Employee or Self-Employed / Small Business Owner
Passive from Big Business or Investments.
Basically said, if you have an active income, you are trading your time for money. If you have a passive income, money will come to you, regardless of the time you put in.
95% of the population has an active income, yet shares only 5% of the wealth. What does that tell us?
- True wealth can only be achieved with passive income
- There's plenty of wealth available on the passive side
- You need to do, what the majority of people don't do
Ways to Get a Passive Income
Investments are what most people consider to be the way to a passive income. Consider, however, what it takes to get a great enough cash flow from your investments to stop working.To get $5000 per month before tax, you will need to have $1,200,000 in the bank at 5% pa or 5 fully paid off units rented out at $270 per week (that'll set you back at least $1,500,000).
Pretty hard to get there, right? Yet this is what we've been told to do: Work hard, so when we're able to retire we may be able to live off our investments. How's your super going?
Investing into Business
Buying shares (or units in share funds) is the traditional way of investing into big business. However, most of us don't have the knowledge to pick the right stocks at the right time and we're always exposed to the risk of falling markets. We also have hardly any influence of the direction and profitability of the companies we have shares in. Unless you become a pro and devote a huge amount of time to the share market (sounds like active income to me), trading shares is like gambling.
Building Your Own Business
We have all heard the horror stories: 95% of all businesses fail within the first few years, people mortgaging their houses to start a business and then loosing it all, countless hours, etc.
Yet building up your own business is the best way of achieving passive income, because you're in control. The success of your venture depends entirly on the quality of your research, the market you choose, the systems you put in place, the relationships you build, your leadership and your vision.
If it's so good, why doesn't everybody set up their own business?
Two reasons:
- It takes effort
- Our education system tells us not to.
Setting Up Your Own Business
Setting up your own business from scratch requires a good idea, plenty of research, a lot of effort and self-education. On top of that you will need to keep an eye on the competition and the latest developments in your market, as well of ample funding.The following will give you keys to setting up your own business whilst minimising your risk.
Key 1: Trailblazing is costly
You've got a business idea, which nobody has ever done before. Great. So you won't be able to learn from the mistakes of other people, will spend a fortune on research and development just to have people copy you once you've established your market.
It happened many times before: The trailblazer does all the hard work, the copycats profit.
The Lesson: Don't be the first. Be among the first to jump on board of the rolling train and you will save yourself many headaches and maximise your profit.
Key 2: Sell What's in Demand
It's easy to sell, if the customers want your products or services, but it's very hard (=costly) to create a market.
Hence, when picking your market, make sure it's a growth market and turnover of your products and services is high. This is where your research becomes very valuable.
The biggest growth markets at the moment are the Health and Wellbeing industry and the Internet Economy (advertising, click-through fees, shopping portals).
Key 3: Put Systems in Place
The biggest mistake in setting up your business is failing to put systems in place. Without systems, you're the magic of your business, which means you'll be tied to it and you're really just creating an active income as you can't afford to take any time out.
Having systems means your business operates without you being there.
You can achieve this by utilising computer programs to automate as many tasks as possible and creating policies and procedures anybody can follow (McDonalds are a classic for this, that's why 13 year olds can run them).
Key 4: Utilise What's Already Available
Never try to re-invent the wheel, it's costly. Business is not school. In business you'll get rewarded for utilising the work of other people.
Be it computer software, proven strategies, or any other aspect of running your business: Take advantage of seminars, business networks, education, discussion groups, business books, etc.
If you can plug into existing systems, do it.
Key 5: Harvest the Power of Relationships
This is by far the most important key. Without relationships, your business will not even get off the ground. You can have the best products in the fastest growing market, but if you don't have any relationships, you will not sell a thing.
What does marketing do? Build a relationship with potential customers in order to make them buy from you.
The old saying "Word-of-Mouth is the best advertising" holds true, especially now that we are bombarded with advertising from all angles. If a friend tells you about a great product or service, you are most likely to at least investigate it. If you are able to get your customers so excited about your products and services that they tell their friends about it, you have just saved yourself millions on advertising.
Key 6: Have a Vision
You need to have a vision, so you know where you're going. Without direction, you will be spinning your wheels getting nowhere.
Begin with the end in mind: Take some time and define where you want to end up. It will be the best time you will ever spend!
Once you've defined where you're going, make sure your vision is communicated clearly and displayed prominently, so you will be reminded of it at all times. Having your vision in front of you will work wonders!
Consider Network Marketing
Network Marketing is exploding. New companies and opportunities appear almost daily. What's so attractive about it?- The Power of Relationships
As explained in Key 5, if you want to sell something, you can't beat personal recommendations.
- Low Overheads
Networking companies don't need a sales force, nor big offices, because the sales force are the independent distributors, who only get paid, if they perform.
- A Loyal Customer Base
Generally, distributors are the best customers. If you want to sell a product, you need to use it yourself, otherwise you're not credible.
Like with any business, careful research is paramount. In assessing a networking opportunity, ask yourself the following questions:
- Do I believe in the product and would I use it myself?
- Are there competing products and how do they compare?
- Can you buy the same or similar product cheaper in the shops or over the Internet?
- Is it a product, consumers want?
- Is it a product, consumers will come back for?
- Are there minimum monthly spends?
- Are there any fees to be a distributor?
- How does the compensation plan work?
- Is the company reputable and has it a proven track record?
- How much support is the company offering?
- Are there systems in place, which will minimise my administrative efforts?
A good networking company:
- Provides all systems to run your business, including web pages, back office functions, sales reports...
- Handles all the logistics (warehousing, shipping, etc.)
- Doesn't need you to carry stock
- Allows you to do any other business (unless it's a conflict of interest)
- Doesn't force you to buy their products every month
- Takes care of your customers
- Has products consumer want and provides them at a cheaper price than comparable products anywhere else
- Allows and encourages you to grow and develop personally
The biggest advantage of Network Marketing is the minimal risk. Given you choose a good company, network marketing will enable you to set up your business part-time, without giving up your normal income stream. The low entry and running cost mean that everybody can afford to give it a shot without loosing their house.
All you need is your conviction, a drive to succeed and some spare time to talk to other people about the product and the opportunity.
Talk to us to find out the best networking companies out there and why.
