How the Richest of the Rich Acquired Their Fortunes
On Monday morning, you get a message indicating there is a new balance in your PayPal account. You check and see that while you were at the beach that weekend, more than $6,500 was deposited into your account from a little eBay business you set up.
On Tuesday, you receive a check from a client: $4,000, which he sends every month.
On Wednesday, you receive a statement from your brokerage account. It shows that you made an extra $475 the day before.
On Thursday, your spouse comes home with the cash she’s collected from the little vending business you started together last year. She plops down $1,400 on the table.
Then, on Friday, your property manager emails you to say he collected last month’s rents. He’s depositing $11,500 into your account.
“Not a bad week,” you think, sitting by the side of your pool.
Of the many ways to build wealth, entrepreneurial equity (i.e., direct ownership of a startup business) offers the greatest potential. This is how the richest of the rich — from Andrew Carnegie to Bill Gates — acquired their vast fortunes.
Now, that’s all well and good. But I want to talk about the second-best way to create wealth — a way that, in some ways, is easier and more practical. It is also the primary way I did it.
I am talking about developing multiple streams of income.
This isn’t the way Andrew Carnegie and Bill Gates made their vast fortunes. If they were coaching you, they might tell you that you would get richer by focusing on a single wealth-creating opportunity, as they did. And they would be right — if you were as smart and fortunate as they were.
But I’m going to go out on a limb here and guess you aren’t in a position to create billion-dollar businesses.
And even if you were, I couldn’t tell you how to do that anyway. I can tell you only what I know how to do. And I got rich — pretty damn rich — by developing multiple streams of income.
How I Got Rich
I’ve been developing extra income streams for more than 25 years. I’ve tried dozens of things. More than half of them didn’t pan out. But my method was always to start very small and test the waters quickly.
If it looked promising, I pushed the throttle. If it started badly, I pulled out quickly.
I recommend that you do the same thing. Find an opportunity that intrigues you. Give it a quick but smart try. If it works, run with it. If it doesn’t, shut it down quickly and move on to income opportunity No. 2.
Last year, my total income from these automatic cash streams exceeded $6 million. I earned that without ever having to go into the office, without ever answering to a boss, and without ever doing anything I didn’t want to do.
It is, of course, much easier to end up with a multimillion-dollar income if you start in your early 30s, as I did. But even if you are older and have fewer than 10 years to generate the income you want, you can do it.
But you must get started now.
Let’s talk about where you are right now. I’m going to assume you are not yet wealthy—or not as wealthy as you’d like to be.
Well, your problem isn’t that you are getting only 0.5% on your bank account, 3.5% on your bonds, and 8% from your stocks. The problem is that you don’t have enough cash!
What will change your finances in a big way? Getting a few extra percentage points on your current investments… or bringing in thousands of extra dollars in cash every month?
I’ve said this many times, but it bears repeating: You cannot achieve financial independence through investing in stocks and bonds alone. You need to increase your income. Dramatically. And put that money to work for you.
The Returns Just Keep Growing
Extra income streams grow miraculously. They get bigger and easier to generate as time passes.
You get income flow No. 1 started. After a month, you have an extra $200 in your pocket. At six months, you are pulling in $600, and by the end of the year, it is $1,200 per month.
But you aren’t working harder at the end of the year. If you do it right, you are working less. In fact, you may be working so little that you have time (and now some extra cash) to start income flow No. 2.
This second effort generates twice as much cash as the first one, because now you’re experienced and no longer fearful. At the end of year two, your annual cash flow is now more than $50,000 — $28,400 from your first extra income stream and considerably more than that from your second one.
No. 2 cash flows at twice the rate of No. 1 because you a) know more, b) have the right contacts, and c) have additional cash flow.
This is the miracle of compound returns. Like compound interest, the income from a passive investment compounds over time. The longer you allow the cash to compound, the faster your money grows.
This same principle applies to all extra income businesses. With each new extra income stream you create, you can leverage the cash flow and expertise from previous flows to make the next one that much more powerful.
Some Extra Income Ideas to Get You Started
Following are a few ideas that I’ve used myself to generate extra income or have coached others to implement. All of them can be started on a part-time basis. And all of them have the potential to become more and more lucrative as you develop your skills.
Copywriting: You can make $50-500 per hour by writing sales letters… while sitting in your kitchen in your pajamas. Write a successful promotion and collect royalties for months.
E-book Publishing: Probably the single easiest way I’ve ever found to generate passive income is by selling useful information online. If you’re an expert in your field, this might be the best extra income opportunity for you to start with.
Property Management: Even if you don’t yet have enough money to buy rental real estate, you can generate thousands of extra dollars per year managing the properties of folks like me. (I paid my manager $72,000 last year, and he works about six hours per week.)
Freelance Photography: Hard to believe, I know, but you can make boatloads of money taking and selling photos.
eBay Entrepreneurship: There are thousands of things you can buy cheap and sell online. Carve out a nice little niche for yourself and the money will never stop coming in.
Blogging: Get paid for writing about yourself? It can be done.
And that is just the beginning. There are all sorts of businesses that you can start on a shoestring in your free time: import/export, franchises, service businesses (maids, lawn care, tutoring, pet grooming or sitting, valet parking, etc.)... and much more.
