The Seven Principles of Passive Wealth
My earlier comments about Bob Brinker produced a response from a reader who wants me to expand on the idea of Critical Mass. And I can't think of a better way to do this than to talk about the principles that lead a person to passive wealth because after all, passive wealth is merely another term for Critical Mass!
These Seven Principles, if followed faithfully, will take any person to a totally new level of wealth, freedom, and consciousness. In fact, everyone could enjoy them if they only knew what to do, and had the intestinal fortitude to see it through.
So here are the principles behind EVERY system of passive wealth:
Principle 1 - Duplication
The hardest lesson to learn for some people is the importance of duplication when developing passive wealth. Duplication simply means the ability to copy, or duplicate, the system of strategies that are making you money.
So if you are a top plumber, lawyer, or accountant, that's great, but it's not duplicatable. A great surgeon for instance doesn't have freedom because he cannot duplicate himself. Surgeons have money, it's true. But if they stop operating, they stop earning. Period. So being a great "anything" - other than a great duplicator - is not the way to massive passive wealth. Therefore you must become a great duplicator; someone who duplicates systems and strategies.
Some of the greatest duplicators have built empires of freedom. They include business people in music, software, finance, and more. They can take a month long vacation. They can sit back and relax. They can all retire tomorrow but they usually don't because they are doing something that they absolutely love. And they all have duplication in their business.
Here's the rule to make sure that your business is duplicating: Will this eventually pay you money if you don't work? If not, then you don't have a duplicatable system. If yes, then you have the potential for a fortune of freedom.
But Duplication is just the start.
Principle 2 - Systemization
There is no passive income without a system. It just can't happen. You don't have to invent a system, you just have to utilize one.
Owning a stock is a duplicatable system. You can duplicate the stock purchase. The company you invest in is the system. And the better the system, the more passive income you will receive.
A McDonald's franchise is a system. They have a well laid-out set of rules that are proven to make money. Their system is so duplicatable in fact that they have thousands and thousands of stores making them billions of dollars.
Here's what's not a duplicatable system: trying every "opportunity" that comes across your desk, or else investing in a stock and then trying to guess whether it might be time to sell... That's called a waste of time and energy.
Passive wealth is unattainable without a system!
Principle 3 - Leverage
Leverage = working to get others to work for you.
If you have a lot of money, leverage it by investing in systems that will make your money grow. Let the system work for you! It's easy, once you know how. And it's the reason why the rich get richer.
But what if you don't have money? Then you MUST have other people working for you. And you must leverage your time or otherwise every business that you start will be just like having another job.
You don't have to hire people. That's old school thinking. If you do hire people then you'll have a job of making certain the people go to their job. And that's a bummer!
But there is still more you must know.
Principle 4 - Discipline
If you wanted to drive from Chicago to Los Angeles, you'd have to set a course. And what happens if you don't stick to the course? Then you'll probably never get there.
The same goes for Passive Wealth. It doesn't come instantaneously. The "trip" you take to get to passive wealth requires discipline. Too many times, people will get close to true passive wealth, only to get distracted by another "opportunity" and then have to start all over again.
If you are investing for passive wealth, you can't touch your principle. You must stay the course. You must commit to the long haul. This alone is the reason why most people fail.
The next principle explains why it's so important to stick it out.
Principle 5 - Exponential Growth
In the beginning of any passive income effort, you are expending time and not receiving much income. But as time goes by, you begin to receive more income without spending much effort at all.
And if you keep earning and investing over 20 years, you'll see that income grow exponentially. In fact, you might even be retired after those 20 years, but that money is still working for you now.
The whole idea behind Passive Wealth is not to get rich quick, but rather, it is to just get rich!
Principle 6 - Leadership
In order to gain passive wealth and gain the freedom to live your dreams, you have to take risks, make quick decisions, and inspire people. In short, you must become a leader.
A very wise philosopher once said: "before you make a million dollars, you must first become a millionaire." What he meant was that you have to develop the mind of a leader. You must develop the habits of a millionaire in order to ever earn a million dollars.
Remember, the effort will pay off, but first, you must pay the price that every leader pays!
Principle 7 - Maintenance
If you build a true passive income based on a solid, duplicatable system, there won't be much maintenance, but you'll still need to keep your eye on things.
Most investors have diversified their funds and make minor adjustments each quarter to stay on top of things. Those with large holdings of one stock may participate in shareholder meetings to help steer the company and keep the management accountable.
Passive income does not give you freedom from all responsibility. In fact, it sometimes gives you more responsibility. But with passive income, you become a leader. Someone who is in charge of their life. Someone whose time is flexible.
So these principles are fine, but in order to get results, first of all you must have a plan!
* * * * *
These Seven Principles, if followed faithfully, will take any person to a totally new level of wealth, freedom, and consciousness. In fact, everyone could enjoy them if they only knew what to do, and had the intestinal fortitude to see it through.
So here are the principles behind EVERY system of passive wealth:
Principle 1 - Duplication
The hardest lesson to learn for some people is the importance of duplication when developing passive wealth. Duplication simply means the ability to copy, or duplicate, the system of strategies that are making you money.
So if you are a top plumber, lawyer, or accountant, that's great, but it's not duplicatable. A great surgeon for instance doesn't have freedom because he cannot duplicate himself. Surgeons have money, it's true. But if they stop operating, they stop earning. Period. So being a great "anything" - other than a great duplicator - is not the way to massive passive wealth. Therefore you must become a great duplicator; someone who duplicates systems and strategies.
Some of the greatest duplicators have built empires of freedom. They include business people in music, software, finance, and more. They can take a month long vacation. They can sit back and relax. They can all retire tomorrow but they usually don't because they are doing something that they absolutely love. And they all have duplication in their business.
Here's the rule to make sure that your business is duplicating: Will this eventually pay you money if you don't work? If not, then you don't have a duplicatable system. If yes, then you have the potential for a fortune of freedom.
But Duplication is just the start.
Principle 2 - Systemization
There is no passive income without a system. It just can't happen. You don't have to invent a system, you just have to utilize one.
Owning a stock is a duplicatable system. You can duplicate the stock purchase. The company you invest in is the system. And the better the system, the more passive income you will receive.
A McDonald's franchise is a system. They have a well laid-out set of rules that are proven to make money. Their system is so duplicatable in fact that they have thousands and thousands of stores making them billions of dollars.
Here's what's not a duplicatable system: trying every "opportunity" that comes across your desk, or else investing in a stock and then trying to guess whether it might be time to sell... That's called a waste of time and energy.
Passive wealth is unattainable without a system!
Principle 3 - Leverage
Leverage = working to get others to work for you.
If you have a lot of money, leverage it by investing in systems that will make your money grow. Let the system work for you! It's easy, once you know how. And it's the reason why the rich get richer.
But what if you don't have money? Then you MUST have other people working for you. And you must leverage your time or otherwise every business that you start will be just like having another job.
You don't have to hire people. That's old school thinking. If you do hire people then you'll have a job of making certain the people go to their job. And that's a bummer!
But there is still more you must know.
Principle 4 - Discipline
If you wanted to drive from Chicago to Los Angeles, you'd have to set a course. And what happens if you don't stick to the course? Then you'll probably never get there.
The same goes for Passive Wealth. It doesn't come instantaneously. The "trip" you take to get to passive wealth requires discipline. Too many times, people will get close to true passive wealth, only to get distracted by another "opportunity" and then have to start all over again.
If you are investing for passive wealth, you can't touch your principle. You must stay the course. You must commit to the long haul. This alone is the reason why most people fail.
The next principle explains why it's so important to stick it out.
Principle 5 - Exponential Growth
In the beginning of any passive income effort, you are expending time and not receiving much income. But as time goes by, you begin to receive more income without spending much effort at all.
And if you keep earning and investing over 20 years, you'll see that income grow exponentially. In fact, you might even be retired after those 20 years, but that money is still working for you now.
The whole idea behind Passive Wealth is not to get rich quick, but rather, it is to just get rich!
Principle 6 - Leadership
In order to gain passive wealth and gain the freedom to live your dreams, you have to take risks, make quick decisions, and inspire people. In short, you must become a leader.
A very wise philosopher once said: "before you make a million dollars, you must first become a millionaire." What he meant was that you have to develop the mind of a leader. You must develop the habits of a millionaire in order to ever earn a million dollars.
Remember, the effort will pay off, but first, you must pay the price that every leader pays!
Principle 7 - Maintenance
If you build a true passive income based on a solid, duplicatable system, there won't be much maintenance, but you'll still need to keep your eye on things.
Most investors have diversified their funds and make minor adjustments each quarter to stay on top of things. Those with large holdings of one stock may participate in shareholder meetings to help steer the company and keep the management accountable.
Passive income does not give you freedom from all responsibility. In fact, it sometimes gives you more responsibility. But with passive income, you become a leader. Someone who is in charge of their life. Someone whose time is flexible.
So these principles are fine, but in order to get results, first of all you must have a plan!
* * * * *
posted by Bob Moser at
5:23 PM
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