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!!!

Finding the RIGHT vehicle for YOU to earn Residual Income

Let's start off this week by asking some important questions. Where do you see yourself in three years? How about in five years? Is there something you would REALLY like to do in three years? How about in five years? Do you have a plan (a REAL plan, not just a thought)? If you continue doing what your doing, are you going to arrive at the destination you are seeking? Insanity has been defined as "Doing the same thing over and over and expecting different results". Are you willing to see your dreams fade away because you aren't willing to explore new ways to reach those goals?


Last week the financial independence offered by Residual Income was the topic. This week we will look at how you will be able to take advantage of the benefits of Residual Income.


Developing a source of Residual Income is not difficult if you develop a plan and have the persistence to stick with the plan. Most people who fail at their first attempt to build a Residual Income generator don't have a specific business plan and therefore become discouraged. AND THEN THEY QUIT!!! Winners NEVER QUIT and Quitters NEVER WIN!!! If they would have had a business plan that led to success one step at a time, they would have been much more inclined to continue one step at a time until they had reached their goal.


Let's begin our business plan by defining what qualities a company should have for us to be willing to put our reputation on the line by endorsing the company and using the products.


(1) The company must have been around long enough to have a history of reputable service and products. Too many new companies fail. You don't want to invest your time and reputation in a company that's not going to be there, when you get your business built!


(2) The company must be committed to developing cutting edge new products. For a company to sustain long term growth, new products are a must.


(3) Companies with consumable products; products that consumers consider a necessity; will provide true Residual Income more dependably than companies that depend on selling the customer a new "Super Duper Gizmo" each month. True Residual Income is only generated if a substantial percentage (25% to 40%) of your customer base purchases products each month.


(4) The company needs to be oriented around a growing area of the economy, with the forecast for the primary demographic that the company serves, showing growth in that part of the population for the foreseeable future.


(5) The company's marketing plan must include back end marketing (monthly catalogs, newsletters and promotions) supplied by the company. You need to be concentrating on building your business, not delivering catalogs and newsletters.


(6) The business plan must be designed so that the average person can be successful. You aren't going to find very many "super salesmen" that are interested in joining your team.


(7) Find a program that DOES NOT require you to do COLD CALLS. Most people are very uncomfortable doing cold calls, in fact, after making a couple they will QUIT. A program that will lead you to success will provide contacts that are expecting you to call and, in fact, want to hear from you.


(8) Finally, the business model should allow you to build your business with a small monthly investment in the beginning, with the business becoming self-sustaining within a short period of time. Large initial startup costs will discourage too many good prospects from becoming part of your business.


After deciding on a company, there is one more very important decision to be made. Who are you going to partner with in this endeavor? Developing a plan that will result in success will be substantially easier if you find the right people to work with you. Your new undertaking will be much more likely to succeed, if you find a marketing TEAM that will be dedicated to your success. Experience does make a difference in this business and success will come quicker and easier, if you have someone to work with that cares about your success.


As was discussed last week, the primary reason most people don't pursue some form of Residual Income is that they were raised to believe that linear income (wages, salaries, one time commissions, etc.) was the best way to provide income for them and their families. The next stumbling block has been that they had no idea how to begin to develop a form of Residual Income. Following the strategy outlined here, and being willing to look at new possibilities, can take you to that dream we talked about at the beginning of this article.


Here's a quote from a man that started with nothing; had more challenges than anyone I personally know; and is now one of the wealthiest men on the planet:
"Never give up, shut up or let up until God takes you up" Peter J. Daniels

Residual Income - Can the average person take advantage of it?

Is Financial Independence Possible for YOU?

Most people earn wages, salaries, commissions or fees in direct proportion to the number of hours they work. The more hours they work the more compensation they earn; this type of structure is called linear income. People receiving some form of linear income rarely achieve what would be defined as true wealth; there simply aren’t enough hours in the day to earn enough money. Think about the wealthiest people in the world. Did they find financial security by earning a higher annual salary, or did they seek 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 independence, only an incrementally higher standard of living. If working really hard won’t earn enough to become one of the rich and famous, how do people who are not born into riches ever achieve real wealth? 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 independence get paid MORE THAN ONE TIME for the work they do.

Now for the million dollar question, how does the average person begin to earn residual income? Most of us were taught to work hard and try to climb up the ranks in whatever profession we chose, working toward the next pay level, hoping to earn a little more disposable income. Then we promptly disposed of that income and began to work towards the next pay raise. Breaking away from the earning model we have embraced for our entire working life is mostly a psychological exercise. There are many opportunities available which allow you to begin to build a source of residual income; however these sources are going to be foreign to the average wage earner and will probably cause some anxiety in the beginning.

Let’s look at some ways to develop a source of residual income:

·        Become an actor and receive residual income from movies, commercials and/or endorsements.

·        Become a famous athlete using your extraordinary skill in the sport of your choice.

·        Allow an oil company to drill an oil well on your property and receive royalty payments.

·        Publish a book and receive income from the continual sales.

·        Purchase rental property and collect rent or lease payments.

·        Invest your extra linear income and receive interest or dividends.

·        Invent a gadget that is patentable and sell the production rights for a percentage of the revenue.

·        Develop a business selling consumable products that people need and depend on, receiving commissions from the repeat sales.

A vast majority of the population is not able to take advantage of the first seven methods of acquiring that elusive residual income we have been discussing. However, the eighth method listed above is a definite possibility for the average person. With a small investment and serious commitment, in what we will call direct sales, success is far easier than most people believe. The secret, or at least what most people don’t realize, to you being successful is finding the right company and team to partner with.