Og Mandino tells the story in his book, The Greatest Salesman in the World, of the young man who learns the value of having his pennies earn pennies. Investing what he earned, over time, built fantastic wealth. At the end of the story, the young man is an old man.
In "Six Steps to Creating Wealth", it was written how one could build an early retirement system. By starting early and investing the same amount monthly in an investment account, a person can retire comfortably. Retirement in this sense means only that one does not have to go to work to receive a check in the mailbox in an amount sufficient to pay all living expenses each month.
By investing more, one could achieve that financial independence earlier. The system requires steady, consistent investment of small sums. Those sums earn interest at 3 to 10 percent and the fund grows over time. $200 invested monthly for 40 years at 10% would result in $1,265,000. Just drawing out the interest at that rate would give a monthly income of $10,000 per month. Most of us could comfortably live on that sum of money. The problem is finding a safe investment that pays 10%. Actually finding any investment that is safe and pays even 7% is a major accomplishment.
Let's look at a business, network marketing. Notice I said business. I mean that it is a legitimate business that should be approached seriously, just like investing in rental properties, a retail business, or your job. Warren Buffett has said that his recent purchase of a network marketing company was the best investment he ever made. Both Donald Trump and Robert Kiyosaki both recommend network marketing.
Why? Your network marketing company has a product that sells for $100 per month for a case. The product is good for you and is consumed so it runs out and one has to buy it over and over. The pay plan provides that you are paid 5% on the purchases you make. The plan also provides for maximum bonuses if you order two cases per month shipped to your door, what is called autoship. You then either use those two cases yourself, or sell to customers and get your money back. So far you are spending $200 per month and earning 5% but not building any equity like a savings plan.
The pay plan also provides for a 5% payment on the sales that you obtain from other distributors that you ask to join you in the business. So the next month, you ask 5 people to do exactly what you are doing. Spend $200 per month on a good product and you ask them to commit to do it for an entire year (total $2400). They are paid just like you were last month and you are paid 5% on the total of $1,000 that they spend. What savings account will pay you on money that is not in your account?
In the following three months, each of them begins to understand the math and commits to do exactly what you did and they are doing by recommending to 5 people each to spend $200 per month on a good product and commit to do it for a year. Now there are your original 6 people plus 125 more people spending a total of $25,000. You earn 5% on the $1000 again plus an additional 5% on the $25,000. They also get paid like you were.
Repeat the math like this example a few times and you can understand what Warren Buffett understood. You are earning a 5% return on other people's money and no one is running around trying to sell 100 people on using a product. Well, you could but it is a lot harder.
What you need is a product and the system to make it work.
Author Resource:-
Jim Montgomery is a business owner, business coach and law firm owner in San Antonio, Texas. He helps people get a home business to get what they want. For detailed information on his business system, visit http://www.work-from-home-business-success.info or email him at jemmktg@mac.com.
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