How is your ROI?

Return On Investment:

Are you getting the most return on

your money for the risk you are taking?

Many investors believe that if their stock portfolio shows an increase in total dollars in the account they are increasing their net worth. The fact is, if you have invested heavily in stocks, you may not be doing as well as you think. The real truth is that the stock market has only had two very profitable periods, in real terms, from 1950 to 1965 and from 1983 to 2000. The chart below shows the performance of the Standard & Poor's 500 stock-market index by decade from 1950 to 2009.

	Price Change	Dividend Dist. Rate	Total Return	Inflation	Real Price Change	Real Total Return
1950's	13.2 %	5.4 %	19.3 %	2.2 %	10.7 %	16.7 %
1960's	4.4 %	3.3 %	7.8 %	2.5 %	1.8 %	5.2 %
1970's	1.6 %	4.3 %	5.8 %	7.4 %	-5.4 %	-1.4 %
1980's	12.6 %	4.6 %	17.3 %	5.1 %	7.1 %	11.6 %
1990's	15.3 %	2.7 %	18.1 %	2.9 %	12.0 %	14.7 %
2000's	-2.7 %	1.8 %	-1.0 %	2.5 %	-5.1 %	-3.4 %
1950-2009	7.2 %	3.6 %	11.0 %	3.8 %	3.3 %	7.0 %

Phrases like "one dollar invested in 1926 would be $3,000 today" are often heard regardless of the fact that a 1926 dollar has little relation with a 2011 dollar. To evaluate properly how much can be earned through investments in a long period of time, the effect of inflation has to be extracted from the picture. The fact is, it is impossible to project how your stock portfolio will perform in the next year, let alone the next 20 years. One thing is clear; the real total return for the last 50+ years is less than 10%, therefore, if the averages are an indicator, you are not going to get a ROI of over 10%!

Returns are a function of risk; typically the higher the return the greater the risk. Thirty-year government bonds are low risk with returns in the 3-5% range. The overall stock market is a more risky but produces an 8-10% return. Small or new businesses are considered the most risky, which is one reason why venture capitalists require average returns of 25-30%.

Established retail businesses typically produce ROI ranging from 140% to 180% depending on location and who you talk to. Retailers are not anxious to discuss profit margins and ROI with consumers. The general feeling I had, when visiting with friends and acquaintances operating retail businesses was that, if the public became aware of the ROI needed to operate a successful business, customers would feel that they were paying too much for the product. Most consumers have no idea how hard it is to operate a profitable small business. Even though I operated a small HVAC contracting business for 20 years, I still do not consider myself an expert on the subject. I was busier keeping up with the technology changes in pneumatic controls than with developing better business plans. One thing is clear; operating the typical retail sales business will net a higher ROI than investing money in stocks or bonds. Reaping this higher ROI will require you to invest a substantial amount of time and effort, either operating the business yourself, or overseeing the operation of the business by the manager of your choice.

Let’s explore another type of business that appears to be the way of the future. In 2010, direct selling companies generated over $125 billion in revenue in 150 countries through more than 75 million men and women. From March 2009 to May 2011, the top 7 publicly traded direct selling companies averaged a 268 percent increase in stock price. There is no doubt in anyone’s mind that the direct sales industry is a solid sector of the economy!

WHY SHOULD THIS INTEREST YOU?

Read on and discover how you and every person you know can benefit from the tremendous opportunity of the rapidly growing direct sales industry.

Direct sales is not a new concept; Amway, Mary Kay, Watkins, Herbalife … - need I say more! How many people do you know that have said things like, “I sure wish I’d got into __________ in the beginning” (fill in the blank with any one of several direct sales marketing opportunities that made a LOT of money for a LOT of people). My point is this – the opportunity to make substantial income in direct sales has existed for a long time. One thing has changed; it is easier to make money in direct sales NOW than it has ever been! WHY??? There are better marketing plans available to affiliates and multi-media opportunities mean you can grow your business nationally and internationally, while sitting at your desk with a laptop!

Back to ROI. The company I currently work with has a unique, cutting-edge business plan like none I have ever seen before. This business plan offers me the opportunity to participate in nationwide multi-media marketing AND is currently expanding internationally! My ROI, calculated over a five year plan, consistently figures to be over 300%.

Anyone of average intelligence and a willingness to consistently follow a simple business plan can accomplish what my wife and I have done.

If I were to quit working with my direct sales business today, I would earn residual income for years to come without ever even thinking about direct sales again.

NO I’m NOT GOING TO STOP ANYTIME SOON, the thought that I will be able to pass on a true legacy to my grandchildren is too compelling!

"Financial Security" - What will provide it?

Wouldn’t it be great to be financially secure — to never have to worry about money?


What would it take to get there? In fact, what exactly is financial security?


First let’s look at what Financial Security is NOT!


Financial Survival - Having an adequate financial plan and enough financial resources to fulfill basic daily needs. A very large part of our society lives life at or below this level from birth to death. In this land of opportunity, where paupers can and do become wealthy, many people never rise to a level above survival.


Financial Security - Having an appropriate financial plan and enough financial resources to adequately fulfill all daily necessities and provide most/or all reasonable desires (no private jets or yachts) of an individual.


Ask ten people to define how much money it takes to attain financial security, and you will probably get ten different answers. For some people, financial security is having $10 million in the bank. For others, it’s $50 million.


One thing is for sure - $1 million isn’t what it used to be!!! Having a full $1 million dollars in the bank, earning the highest long-term interest rate of 2.55% for 5 years (the best I could find recently), will yield a whopping $1,135,979.74. That averages out to $2,266.33 a month - not enough to pay the bills for most of us. With the median home price in the United States around $220,000, there may not be much left after paying the monthly mortgage. That’s not bad, if you want to keep working for the rest of your life at the same old job you’re working at now. Less than $2500 a month is not going to provide a lifetime of financial security on its own.


What about $10 million? At 2.55% (compounded daily), that will generate an annual income of approximately $272,000, without working. Now we’re talking some real money and enough to provide real financial security for most people! I suspect if you had $10 million to invest, you probably would have other things to do besides read this blog.


The problem with defining financial security in these terms is that having $10 million, $50 million or even $1 million is a pie-in-the-sky dream for most Americans. We’d all like to have millions of dollars, and it’s not bad to aspire to that goal. The problem is, if we define financial security by such large amounts of money, most of us believe that it’s out of our grasp. Clearly a certain level of wealth is necessary to provide true financial security. The question is: “If you don’t have millions of dollars to invest, how will you generate the necessary wealth to feel financially secure?”


A broader definition of financial security, that is achievable by any reasonably industrious person, begins with having a better source of income than what is provided by an hourly wage job. Earning your income in an hourly wage job limits the amount of income available due to the limited number of hours available to work. Your body simply will not function at an acceptable level without nourishment, rest and companionship.


Think about the wealthiest people in the world. Did they find financial security by earning a higher annual salary or by seeking a raise in the hourly rate that they were being paid? Of course not! More money per hour and higher salaries will never provide true financial security, only an incrementally higher standard of living. Working really hard won’t earn enough to become truly financially secure. There is a better way - earning what’s called “residual or passive income” - and it’s easier than you might think. Residual income is earned when you stop trading time for money, and start thinking like an entrepreneur. The people who have discovered how to have true financial security get paid MORE THAN ONE TIME for the work they do. (For more information on residual income see the May 3 blog titled “Residual Income – Can the average person take advantage of it?”)


Having a residual source of income that exceeds your level of financial survival allows you to continuously reinvest the earnings back into your residual income generator, steadily increasing the amount of residual income available. Developing a dependable residual income generator results in a legacy that provides generations of your family with true financial security!


I can hear you asking “If this type of opportunity is available, why aren’t more of my friends or family taking advantage of it?” The only possible answer is that they have been trained for generations to think that the only way to earn a living is to go to work. And, if they aren’t earning enough to provide the income level that they desire, they need to work harder, work longer or find a better job. The most difficult thing for people to do is change the way they view the world. If they were raised in an entrepreneurial environment, the thought of residual income is very natural. If they were raised to think in terms of an hourly wage job, residual income is simply not something they have even considered. The only way to get something that you’ve never had is to do something you’ve never done.


Most people have little to show for years or even decades of hard work. Many live from paycheck-to-paycheck and are stuck at jobs they don’t enjoy because they have to pay their bills. If they quit their jobs or were laid off, it wouldn’t take long before they were in dire financial trouble. Most people reading this blog will continue doing the same thing tomorrow that they did today expecting different results. Do you want more out of life than going to work at a job that you don’t really enjoy? Isn’t it time to start looking outside the box that you’ve been looking in? Large numbers of people are generating substantial incomes without working at the jobs that they hated to go to every day. YOU CAN TOO!!!