The Millionaire Secrets

Welcome back. This post will cover the final part of MONEY TREE FORMULA. Still remember what is the main uses of this formula? It is for you to create multiple streams of passive or residual income. We don’t want linear incomes in our life. This is because for linear income, once we stop working on it, the cash flow will stop as well, which is what we don’t want to. What we want here is that kind of cash flow that even when we stop working for it, the income will still flow into our pocket. In other words, we work once, but make profit for the rest of our lives. So let us continue with the MONEY TREE FORMULA.

MONEY TREE - T stands for : Trend and Timing

To start a business against the trend is exactly like swimming opposite to the direction of current. When we choose a business that is with the trend, it is just like floating together with the current. But, how do we know that a certain business is on trend? It is around 1968, a lot of babies were born, and we refer to those who was born at that time as baby boomer. At that time, if you start your real estate business, you will make a killing by owning properties. The timing is exactly right, you could do almost nothing wrong. So you can see, the secret here is to get in front of a trend and ride along with the wave.

The biggest wave of our century is the baby boomers period, almost 76 million people. This number is almost four times the number of previous generation. And what more important about this mass of humanity is that, it creates a huge demand wave. Picking businesses which are at the leading edge of this age wave has created thousands of fortunes. You need to make sure that your new business is leading this trend and not following it. It can make a huge difference in your lifestyle. So you can see here, the bigger the market the higher the demand, therefore, you need to choose a good trend and timing for your business. And the best timing is to hit the market of the generation of baby boomers.

Let me give you a good example. Have you ever walked up a Down escalator the wrong way? When you walk up the Down escalator, you have to walk fast just to stay in the same place. And to get to the top, you have to walk at double speed. People on the Up escalator don’t have to work hard at all. They just stand there holding the handrail, and the escalator takes them to the top. This is what is happening if you’re to swim downstream along with the current. In fact, there’s not much that you need to use your own energy to swim, the wave will bring you to where you wanted most! That’s why it is so important to go with the trend.

MONEY TREE - R stands for : Residual

Well, we’ve already talked about the need for residual income as a major part of the MONEY TREE FORMULA. In the past, how many people ever make it to become a millionaire? The answer is, only a few. And for this generation, with the help of technology, especially the internet, it will help you easier in your life to become a millionaire. In fact, never before it is this easy to be a millionaire. Look at all the self-made millionaire, they’re getting younger and the numbers are increasing drastically! In the past, people only depend on paper assets and brick and mortar business to become very rich. But now, even a very young kid can be a millionaire.

Why is this so? This is because of the power of residual incomes. Then what has it got to do with the timing? Why in the past so few ever made it to ultra rich? Why now we’ve got some kid who made a fortune at a very young age? A very simple answer, because we are living in the information age. Why information can make you a millionaire in such an easy way? Again, this is because with information, your ideas count! This is why you have to use your idea to create residual income if you want to be a self-made millionaire. There is no use if you can make a million dollars with half of your life time gone managing your business.

Ok, get back to the escalator example that I use just now. The two escalators also can be use to represent the two kinds of income that you can earn: linear income and residual income. Our economy is a Down escalator. You work hard for your money, but with inflation you have to earn three to five percent more next year just to stay in the same place. But this puts you in higher tax brackets. The more you make the more taxes you pay. It seems you work harder and harder without making any progress. Your bank account balance earns two percent and your credit card balance costs you 20 percent. You’re going in the whole 24 hours a day. You wonder why you can never catch up. And if you stop, guess what happened, the escalator just takes you right back down to the bottom.

So now you can picture a more clearer concepts of the importance of residual income. Here is another good example. Do you know how they catch monkeys in Africa? A native takes a coconut and cuts a hole in it, just big enough to allow a monkey’s fist to enter. To the other end of the coconut the man attaches a long cord. He places a few peanuts inside the coconut, places the coconut in the middle of a clearing, and hides behind a tree to wait for the monkeys to come. The monkeys come and smell the peanuts inside the coconut shell. One monkey reaches inside the shell to grab the peanuts, but while holding the peanuts the monkey’s fist is too large to escape the hole in the coconut. The native, then, yanks on the cord and hauls that silly monkey to captivity because the monkey will not let go of those peanuts to save his skin. Are you working for peanuts? If you’re walking up the Down escalator, you are caught in a Monkey Trap. What you want is Up Escalator Income. Which escalator are you on?

Before you go to sleep tonight, ask yourself how much percentage of your day that you spend creating residual income? If your answer is zero, then you’re in trouble. You’d better wake up tomorrow and get busy.

MONEY TREE - E stands for : Essential for Everybody Everyday

Whatever you sell, try to pick something that is essential or is perceived as essential by a large and very motivated segment of society. Take the example of real estate, the real reason that real estate has always been a great wealth creation vehicle and a prime source of residual income for hundreds of thousands. It fits the MONEY TREE Formula. No matter what product or service you choose, make sure it’s Essential for Everybody Everyday! The more people need it and the more often they need it, the more successful your business can become.

MONEY TREE - E stands for : Enthusiasm

You’ve got to love what you do. If you hate what you sell, you’ll never be any good at it. The prime admonition from Gary Halbert, one of the all time great marketing gurus, is this: “SELL WHAT YOU LOVE.” The truth is, you’ll never be truly great unless you do. Once you love what you do, you will treat them as a game. Which also means that you play to make money, not work to make money. And this is very true. Some people say, just do what you love, and money will follow. Besides that, only by doing what you love, you will feel passionate about it, you will feel motivated, and has the enthusiasm to do it more.

Well, there you have it, the nine major characteristics of the MONEY TREE Formula. These nine characteristics are essential to the kind of hands-off, hassle-free businesses that create lifelong streams of cash flow.

Read: The MONEY TREE Formula - Part 1 and The MONEY TREE Formula - Part 2

Hi, welcome back to part 2 of The MONEY TREE Formula. First, do you know who is Warren Buffet? I’m sure you know who he is. Warren Buffet is the smartest stock picker in history, he is the richest investor with a net worth of tens of billions. What if one day Warren Buffet himself call you on the phone and told you that which stock is going to rise dramatically, he told you that he had invested all his money into that single stock. What will you do? Are you going to follow him or are you going to say sorry to him and turn him down? Well, I’m not Warren Buffet and I’m not brilliant investor. But what I’m going to share with you below is the MONEY TREE Formula presented by Robert G. Allen, I hope that this will help you in you financial road.

The first step to picking the right income streams is to pass them through the filter of the MONEY TREE Formula - The nine essential characteristics of the ideal income stream. Having a MONEY TREE assumes that you have continuous streams of cash flow which is in autopilot, or in other words, without your presence. To do this, you must be in a position to control, to create and own that stream of income. You may still retain your employee position, but on the side, as a way of protecting your long term financial future, you need to create additional streams of income, as soon as possible. You cannot only depend on your job salary, this is because working for someone else is not secure anymore. It’s just the illusion of security. We won’t know when we will get fired or when unfortunate things going to happen and we will lose our only secure job.

MONEY TREE - M stands for : Multiple Streams of Income

The first thing to do is to add another stream of income to your life. This will work as safety net for when one of your stream dries up. You can choose to start your home based business, which should be a source of more than just one stream of income. It should be eventually a source of Multiple Streams of Income all by itself. For example, suppose you’re considering buying an existing restaurant. What possibility will you have to grow?

* Can you add more shops?

* Can you franchise the business?

* Can a food entrée of yours be sold nationwide as a frozen item?

* Can you license your special cooking secrets to other restaurants?

* What about bottling and selling your special sauces?

* What about a cookbook?

Get the drift? Don’t even consider a business that doesn’t have expansion potential for additional streams of income. That’s why the first M in the formula reminds you of Multiple Streams of Income.

MONEY TREE - O stands for : Outstanding Product or Service

Well, if your product or service or information is not excellent enough, most probably you will become casualty of the competition. The reason for planting money tree is to do the work once and enjoy the fruit (money) for the rest of your life. It makes no good if you create a business and in the end have it succumb to competition. In order for your stream of income to survive through recessions, you must choose a product, service or information that will stand permanently and perpetually profitable. Only then during tough time, you can survive your stream of income. People will gravitate either to price or quality in tough time, so don’t get stuck in the middle, that’s confirm a disaster formula. Do not compete your price with the rest of the world, make sure the quality you produce is outstanding, and the best is, fair price. Therefore only you will succeed for the long term.

MONEY TREE - N stands for : Nothing Down

Ok, why nothing down? Well, it is not necessary have to be all zero down, but as little of your own money as possible. For average person, they don’t have a couple of hundred grand lying around waiting to invest. What if you have a lot of cash, should you invest in business to match your money and launch in? Suppose you want to buy a hot franchise, you will then need to purchase inventory, the franchise rights, equipment, and many other things. For most franchises, you will tie to a business of 12 hours a day, manage your very own business. What do you get in the end? You spend tens of thousands of dollars of your own money just to buy yourself a job with a lot of risk. That is why you need to choose streams of income with little or nothing down.

MONEY TREE - E stands for : Employee-resistant

Yes, you read it right, it’s Employee-resistant! We don’t want to be employees, they are dangerous! It will make you entitled to your jobs (”You can’t fire me. I own this job.”) What you want here is to find a home-based business that can be done by yourself, with a very low employee to income ratio. The story from Robert Allen :

‘I used to be the president of a seminar company with over two hundred employees. I made the decision to downsize when one of the employees sued me for age discrimination. He was in his late sixties when he came to work for us, and when we laid him off during an economic downturn he slapped us with a $500,000 lawsuit. We settled out of court for $2,000, but that was the last straw. I decided to never again put myself in a position where one disgruntled employee and a smart attorney could take it all away. Today, I (Robert Allen) have zero employees. I make as much today as I used to make with 200 times less hassle. I like it that way. All of my streams of income can be monitored (in just a few hours a day) from a telephone anywhere in the world.’

So now you know why it is Employee-resistant. Try to find Money Tree businesses that don’t require any employees, and then you don’t have to worry about either hiring or firing.

MONEY TREE - Y stands for : Yield

The Streams you choose should be of high yielding, high profit cash flow. Here is what Robert Allen going to say:

‘Five years ago a friend of mine, Collette, started such a home-based business. In less than a year she was making about $10,000 per month. What’s more, this business was a Money Tree business. It generates cash flow even if she stops working! But why stop when she is having so much fun? Today, after five years, she has grown her business till she now earns over $500,000 a year net, net, net. What’s the yield on that kind of income? It’s the equivalent of having TEN MILLION DOLLARS in the bank earning only 5% interest! That’s my idea of yield. In my Multiple Streams of Income book I share exactly how Collette did this. I also give other businesses that meet the same kinds of Money Tree characteristics.’

Read: The MONEY TREE Formula - Part 1 and The MONEY TREE Formula - Part 3

The Money Tree Formula that I’m going to talk about here is from Robert Allen. You are eager to find out how to plant a money tree don’t you? Here’s what the Money Tree Formula is all about.

Basically, if you want to be a millionaire, earn big money, then you can plant a money tree in your backyard and start heaping the harvest day by day. But why doesn’t everyone plant a money tree? This is because nobody teaches us how to plant it. To be frank, nobody teaches the average person about money and how to grow it. Have you ever had a money class in school? No. The only way an average person learn about money is from the school of hard knocks. Parents do teach their kids about money skill. They transmit the same money skill to their children, as a result, the rich get richer and the poor get poorer. Then the misleading by the media, advertisements about lotteries, and game shows, as if like money is not something to earn, but to win. And to become a millionaire means what, spending lavishly. This is the most serious misleading from the media. Buying luxury cars, big houses, all these are the wrong concept of what being rich is all about.

Therefore, we need to understand that money is one of the most important subjects in our entire lives. Some of life’s greatest enjoyments and most of life’s greatest disappointments stem from your decisions about money. Your relationships will be greatly affected. Ninety percent of all divorces in our society result from disagreements about money. Therefore, understanding money, how to make it and keep it, is absolutely essential to your life, to your relationships, to your happiness, and to your future.

So, we know that money is so important in our life. But there are people who manage money differently. The same million dollars can slip through some people’s hand without noticing why, and the same million dollars can be well manage by some people, keep it, and grow it. Why? Are they 100 times smarter? No. Then are they work 100 times harder? No. Then why? So what’s the different? They just know how to play the game. You see: MONEY IS A GAME, a very important game. If you know the rules, you win. If you don’t know the rules, you lose. As someone said, “Wealth is when small efforts produce big results. Poverty is when big efforts produce small results.” Or as it has been said another way, “Complaint is poverty!” Some people with the greatest difficulties overcome them and become very wealthy as a result. When you learn how to triumph in one area, which know-how transfers to all other areas of your life.

In our life, there are plenty of ways you can make money. But what we want here is ‘Multiple Streams Of Income’. And most people will ask, why multiple streams? How many streams of income did it take in the 1950’s for a family to survive? One. Today, very few families can survive on less than two streams of income. And that won’t be enough in the future. It’s a volatile future. You’d be wise to have multiple streams of income flowing into your life. The rich always know about this. They cannot depend on only one stream of income. In case if one stream dries up, they’re still safe, they can be supported by other streams, they’re stable. As for average person, they got only one stream, if this stream dry up, they’ll be wiped out. In the future, we need more than one stream of income, we need many streams of income. Up until this point of your life, how many streams of income do you have?

So assume that you’ve decided to add another stream of income to your life. You could always get another part-time job, but that’s not the kind of income I’m talking about. You certainly don’t want to get stuck on somebody else’s treadmill. You want the kind of streams that you can own. I’m talking about Residual Income, Passive Income. That’s a fancy term for a “recurring” stream of income that continues to flow whether you’re there or not. I’ve heard too many small business owners say, “I haven’t taken a vacation in five years.” There’s something wrong with that picture. I don’t have anything against hard work. But after a few short years of hard work, you should be free to have your streams of income forwarded to your mailbox in Tahiti. Get the picture?

What we want here is residual income and not linear income. Linear income is like the salary you get from your job. You work for few hours and you get paid for that few hours effort, once you stop, you’re not going to get any money from it. While for residual income, you work hard once, and it unleashes a steady flow of income for months or even years. You get paid over and over again for the same effort. The secret of the rich is not that they have more money but that they have more TIME FREEDOM. Because many of their streams are residual, they have time to spend on anything they want.

What percentage of your income is residual? If you’re smart, you’ll start shifting your income streams from linear to residual. This will give you the time freedom to do what you want when you want. So, start by turning on at least one new residual stream this year.

Read: The MONEY TREE Formula - Part 2 and The MONEY TREE Formula - Part 3