What is the value of your business? It doesn’t matter whether we are talking about Ambit Energy, or any other network marketing company, or MLM, or your investment portfolio. For any comparison and deeper understanding, see how to evaluate a company. The end goal, when you reach retirement, will be to receive money from your investments. Residual income can be considered similar to investment income.
Consider this; your residual income is no different than receiving money from a CD or an investment portfolio. The only qualification is the longevity of the business or its income. I will get back to that in a moment.
People often hear extensive marketing about becoming a millionaire. Many of these, actually almost all of these are bogus. But, let’s talk about financial freedom and what it truly means.
Is it truly worth the hard work to receive residual income? Most people quit because they don’t truly understand what they are getting. Unfortunately, that is because most are promised instant riches and overnight success. You can’t measure the value of residual income just looking at your receipt of $500 or more, a month. That is $6,000 per year. In the chart below, you can see that $600,000 at 1% interest would yield $500 per month. Why do I pick $500 and 1%? A couple of years ago, $500 a month would have prevented approximately 70% of the bankruptcies in the United States. In the table labeled interest rates for CDs, you can see that based on current rates 1% is almost what you can depend on receiving.
So, when was the last time you saved and put aside $600,000 in the bank?
While you are working in your business, if you are building residual income, you must consider part of that income the equivalent value of an investment or equity that you would be putting aside just like a bank account. As I have just shown, your residual income is just like earning from investment money. So, if you start getting $2,000 per month, it would be equivalent to having $2.4 million in a secure account.
Most people would consider themselves financially free at around $4,000 per month. Yes, some will be more some will be less, but it doesn’t hurt the example. $4,000 per month or $48,000 per year is equivalent to $4.8 million being drawn at 1% interest.
Now a couple of qualifications are in order. Yes, interest rates may go up. Let’s say they double or quadruple. That would still be equivalent to $2.4 million or $1.2 million being in CDs. Keep in mind this is your residual income not other income for your ongoing work while you are building this residual.
So, when you are having hard times or members of your team are having hard times and complaining that they are only making $500 or $1,000 per month in residual income, remind them what they are receiving without any work whatsoever. The residual income is equivalent to the having earned and put aside the money in CDs as stated in the table. That is just as if that money was deducted from your paycheck before taxes and put into a 401K. Then bring them back to this article to let them see it again.
Are these interest rates reasonable? Well, here are the current rates available today, March 6, 2012, as sourced from Google Advisor which takes reported bank rates.
The other and very major qualification is the longevity of your business. Check on this thoroughly. Are you in a business with short-term prospects? Can you retire from the business and continue to earn residual income? Are the owners committed to the long-term? At Ambit Energy, all of these questions are able to be answered positively. Most importantly, in 2012, this is still just the beginning with less than 5% of the market even started (see Beginning of the Ambit Opportunity).