(reference : Dan Lok)
I want to share with everyone one of the internet leading KOL on wealth creation in which I find he puts a lot of everything in good context and summaries points. Enjoy!4 Sources of Income:
Linear Income: Trading hours for dollars. It’s predictable and give you money quickly but will never give you financial freedom. When you stop working your income stops.
Salary
Overtime
Commission
Consulting Fees
Professional Services
Leverage Income: Using other peoples time, money, assets, connections, talents, expertise and resources to make you money. You are not doing all the work yourself.
Strategic alliances
You have sub-contractors
You have good will
You have client contracts
You have salaries staff
Sales based network marketing
Passive Income: The result from leveraging people and a system to make you money.
You have commission staff
Buying based network marketing
RenewalsInternet Income
Dividend Income
Windfall Income: Getting a large sum of $ all at once
Appreciation of Stocks
Winning the lottery
Selling a business
Appreciation of real estate
Inheritance
Large bonuses
Why passive income is a dangerous fantasy and the Myths that keep you from financial freedom:
The truth about passive income will set you free but first it’s going to piss you off.
Myth #1: Financial Freedom
Financial freedom: When your passive income exceeds your expense.
Don’t aim for financial freedom. Aim for financial confidence. Develop the skills to make money anytime anywhere you want no matter the circumstance.
Financial confidence is the ability to be dropped in any city anywhere is the world, start from nothing and have the ability to make money.
You can’t stay ahead of your competition passively. You can’t maintain a loyal tribe of customers passively.
You can’t lead great teams passively. You can’t create meaning, passion or purpose in your life passively.
The business that you’re investing in or creating doesn’t tend to be creating and VALUE for its customers or for anyone. So it doesn’t spit out the cash that you were hoping it would. So many times I’ve seen people pursue passive income and end up having active losses instead.
Avoid the shiny object syndrome. Stop jumping from one opportunity to the next hoping that you will find the silver bullet to your success because it doesn’t exist.
Myth #2: Passive income is easy
Passive income: It’s not easy and requires a lot of work. Passive doesn’t mean effortless and doesn’t happen overnight.
People interpret the message as “Passive income is easy and effortless, all you have to do is set it and forget it”
“Passive income is a great revenue source that is earned from persistent, ongoing cultivation”
Aim for “Leverage Income” in a business you care about, NOT “Passive Income” in a business you don’t care about. Greater passion leads to greater income.
Instead of thinking what is the least I can do to make money think about what you can contribute to the world and how you can give your business purpose.
Master 1 new skill at a time. Build upon the skills you already have.
How to achieve mastery = Focus for a long period of time.
An amateur knows 1000 moves but practices them 1 time. A master knows 1 move and has practiced it so many times that they don’t even think about it. It becomes a natural reaction.
96% of businesses fail in the first 10 years. Only 4% of businesses survive. To be the 4% you can not do it passively. You won’t stay successful if you do it passively. You can become successful but sure as hell you won’t stay successful.It is harder to stay successful then it is to become successful.
Myth #3: It’s what you do
It has 0 to do with what you do but some businesses are easier to scale.
You need to be passionate about what you do. So you will enjoy working and can give as much value as you can. If you are not passionate about what you do how can you expect other to be.
Example: Hello kitty makes 800 million a year by leveraging its intellectual property through licensing. It's a stupid cat character.
Ask yourself, "How can you create more leverage income in your business?"
Steps to creating and enjoying the wealth you deserve:
What does it take for you to feel wealthy?
“No amount of money will make you wealthy. Wealth is a state of mind”
F.U. Money Formula
(Platform + Growing Demand + Value) X (Automation + Scalability) X Controllable Leverage = F.U Money (AKA. Live life on your terms)
The biggest reason businesses fail is because they can’t find enough customers and make transactions with them before money runs out!
The great thing about using a platform is you can leverage the success of large companies that already have customers completing transactions.
Example: App store
Marketplace: Buyer + Seller
Growing Demand: over 575 million active users
$10 billion in revenue for developers
How To generate massive passive income:
Realize you are already wealthy. Most places in the world people find it hard to get the basic necessities of life.
Find a market within a platform a platform and provide real value in that marketplace. This builds you a sustainable, profitable and purpose driven business.
Once that happens, you can find ways to leverage yourself through automation and scale up your business. This evolves your business into an asset.
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