Archive for the residuals Category

Are you creating derivatives?

Before I begin to write about how to create and develop derivatives, I first want to ask you do you know what a derivative is?  If you think the derivative I’m talking about is some exotic financial instrument traded on Wall Street then your wrong.  The definition of a derivative is a byproduct or substance that can be created by another product.  The root word for derivative is derived.  So let me illustrate for you an example of a derivative; let’s use an apple.  An apple is a derivative of an apple tree; apple sauce, apple juice, and apple cider is a derivative of an apple.  Do you see my point, the example that I gave you were two examples of byproducts of another, which in turn created derivatives.

As a business owner or entrepreneur you too should be creating your own derivatives; that derivative could be a book, an online course or a coaching program.  The derivatives that a business owner creates become byproducts for that business, and when you create your own derivatives you create infinite income or passive income for yourself.  Your business derivatives become assets created by you, and when you create your own assets; your assets create passive income.  See most business owners concentrate on generating earned income, for example how can I get more business or get more clients.  But when you concentrate on creating earned income, the asset side of your balance sheet is empty and it has zero assets.  In order to create passive income you have to build your business assets which in turn are your derivatives.  When you begin to create derivatives the asset side of your balance sheet builds up, which will create passive income on your profit & loss statement.  Remember in business it’s important to have a profitable balance sheet as well as a profitable income statement.  So what are you waiting on get started on that book, put together that online course, or start that coaching program.  Remember when your begin creating financial wealth your only using 10 percent of your time and living on 90 percent of what you created.

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What are the Three types of Income?

Many clients and people I randomly talk to always share with me the reasons why they cannot  start building Wealth.  One of the responses I always get is “My Income is not High Enough.” My response to them is always “What Income is not High Enough?”  These individuals are not aware that there 3 types of Income, which are Earned, Passive and Portfolio.  Most people are only aware of Earned Income, which is what they are referring to when they are complaining about their income is not high enough.  Here is the definition of the three types of Income:

• Earned Income – income you receive from your job or place of employment

• Passive Income – income you receive from royalties, real estate, intellectual properties

• Portfolio Income – income you receive from mutual funds, dividends, investments.

Earned income is income that you have to work for it does not work for you.  If you want to establish streams of income that can work for you and you not work for the income.  It’s important to work towards building Passive and Portfolio income.

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