T h e Fo r m u l a

f o r C r e a t i n g We a l t h
at H om e
V9 Copyright Robert Ryan 2002-07
www.AboutRobertRyan.com
Em: robert@aboutrobertryan.com

Table of Contents:
I retired from working jobs in 2004 at age 31...............................................................2
The formulas for poverty, middle-class and wealthy cash flow ..................................2
The differences between Linear Income & Passive Residual Income ....................3
Note: all options require investments of time, money and effort.....................................4
Another option for creating linear income: small business ..............................................4
The low odds of long-term success with linear income....................................................4
Options for creating pipelines of passive residual income...........................................5
Investor (eg. share market) .......................................................................................5
Real Estate ..................................................................................................................6
Royalties .....................................................................................................................6
Franchise/Corporation...............................................................................................6
“The Perfect Business” ...................................................................................................6
How does it work? .....................................................................................................7
Leverage: a key for success........................................................................................8
Comparison of 4 Ways to Create Wealth .....................................................................9
Discussion of return on investment after 10 years ................................................10
Conclusion ...............................................................................................................11
If this is so “perfect”, why isn’t everyone doing it and succeeding at this? ...................11
For more information...................................................................................................11
The master plan for achieving financial freedom.......................................................12
Appendix: reality check – how financially secure are you? ......................................13

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 1

I retired from working jobs in 2004 at age 31
In 2001 I was a mess. I was in debt, eking from pay-to-pay in fear of losing my job and being cast onto
the heap of the unemployable. I was in constant extreme pain: I had been diagnosed with fybromyalgia
and chronic tendonitis in both arms. This came about after several months of working 80-hour weeks in
my I.T. job and completing related tertiary education in the midnight hours. After 8 years in the
workforce I concluded: “This is not working for me. If I keep doing what I am doing it will only dig my
hole even deeper. I could stay on this path and lose what’s left of my health and my self-esteem, lose my
house, maybe my wife and friends (because I was becoming very bitter and angry) …OR, I could do
something different.”

Hence, I chose to learn what people do to become financially free, so that they no longer need to work
jobs. I was in the mess I was in because I had been a corporate pawn. I had been vulnerable and
exploitable because my job was my only source of income. Hence, I worked excessive hours of unpaid
overtime and was soon burnt out in my late twenties. When our entire team was “let go” it could have
been a total diaster. However, seemingly just in time, I had built a pipeline of passive-residual income
on which I have survived since then. In other words, I did not have to worry about getting another job or
about social welfare. I had become financially free: my passive-residual income exceeded my expenses.
This article summarises the knowledge that I acquired and most importantly, applied, that set me
on the path to freedom. I trust that this knowledge can similarly help you too.

The formulas for poverty, middle-class and wealthy cash flow

In books like Rich Dad Poor Dad and The Cashflow Quadrant, best-selling author Robert Kiyosaki
explains how people create their financial circumstances through the following cashflow formulas. 1

Poverty cashflow Middle-class cashflow Wealthy cashflow

Income Income Income
- Welfare - Job - Business residuals
- Job - Small Business - Dividends/Interest
- Welfare - Rental income
- Royalties

Expenses Expenses Expenses

- Taxes - Taxes - Living costs
- Rent - Rent or income - Taxes
income
- Living costs Mortgage gone Surplus income
gone
- Living costs is re-invested
to increase wealth

Assets Liability Assets Liability Assets Liability

ie. debts - Residual Income
- Bank Loans Business
- Mortgage - Real Estate
- Credit - Stocks
card - Bonds
- Intellectual
property

• The Formula for Poverty: receive linear income money (from welfare and jobs) and spend it all
on expenses and “stuff” that has little or no asset value.
• The Formula for being Middle-Class: receive linear income money (from jobs, welfare and

1 - These diagrams are adapted from: Robert Kiyosaki & Sharon Lechter, Rich Dad Poor Dad – What the Rich teach their kids about money that the poor and
middle class do not, 1997, pages 54-58,69, 157 Cashflow Education Australia.

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 2

 traditional small business). Then spend it on expenses and on items that you can’t truly afford.
This means you borrow money to pay the balance and thereby go into debt. These debt-creating
items are termed “liabilities”. They create a drain on your income. Such liabilities include getting
a bigger mortgage and borrowing money to travel or to buy a new car and other flash toys that
you can’t pay for in cash. People in this bracket may appear wealthy on the surface but are
actually far from it.
• The Formula for Wealth: Invest your income in assets. Through assets your money works to
create more income for you long-term. Assets include businesses that produce residual income,
royalties from intellectual copyright, stock market shares and rental income from real estate. You
achieve the state of financial freedom when the income from your assets covers your expenses.
To become wealthy avoid liabilities; avoid the bad debt that drains your income. Initially, people
in this wealthy bracket may not appear wealthy on the surface. They know that being obsessed
with the outward appearances of having flash cars, houses and toys creates long-term bad debt; a
prison that is hard to escape from. Instead, wealth-minded people re-invest their money in
income-producing assets. Eventually, they can afford all the toys and stuff they want without
going into the bad debt that middle-class-minded people get into.

Now let’s consider…

The differences between Linear Income & Passive Residual Income

Linear Income Passive Residual Income

Linear Income: To create linear income you work
for an hour to get paid for an hour. There is a
direct line, a one-to-one linear relationship,
between your time and your income.
Linear Income: If you don’t work the hours you
don’t receive income. And your earning potential
is limited by the number of hours you can work.
Regardless of whether you’re a street-sweeper or a
doctor, your income potential is limited by time.
Residual Income: To create passive residual income
you invest in an asset that can eventually create income
for you on autopilot. You invest time, money and energy
in the short-term to gain greater financial rewards over
the long-term.
Residual Income: Once you’ve properly established a
system you can stop working and still receive income
from it long-term; even when you’re asleep, on holiday
or retired. Your income potential is unlimited. You can
invest more time and money into the system to increase
the results.

Linear Income: Working for linear income is like
hiking from your house to a distant river to then
haul buckets of water back to your house – day
after day, decade after decade. If you don’t haul
the buckets, you don’t have any water. This is like
going to your job or small business each day,
decade after decade, in order to haul home buckets
of income.
Residual Income: With passive residual income you can
save yourself from a lifetime of hauling buckets of water
every day. Instead you work to build a pipeline from the
river to your house. Once you have built this pipeline the
water will come to you day after day, with very little
effort on your part. Hence, you make yourself free from
the daily chore of hauling buckets. You can then spend
your time doing other things.

Linear Income: This entails short-term gain
(buckets of water or a wage) at the price of long-
term pain; being trapped in the cycle of having to
haul buckets (going to a job) almost every day for
decades.
Residual Income: Residual income entails a price of
short-term pain (some extra work on the side for a period
of time) to achieve the long-term gain – the pipeline of
income that requires very little effort to maintain.

Linear Income: Examples of linear income Residual Income: Examples of passive residual income
include being an employee (working for someone include: rent from real estate, dividends from the share
else) and the kinds of small business where, if you market, royalties from a best-selling book, and certain

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 3

 stop working, the income stops coming in.
Linear Income: If your job or small business is
your only significant source of income, and you
lose it, how secure are you? How long could you
maintain your standard of living? Relying on linear
income alone is a recipe for financial insecurity.
businesses like those on the internet where you refer
customers to 3rd party companies and earn regular
referral commissions on the repeat orders of consumable
products (delivered direct from company to consumer).
Residual Income: The key to financial security is to set
up several pipelines of passive residual income. If one of
your income sources dries up then you still have several
other pipelines of income.

Note: all options require investments of time, money and effort

To obtain the rewards from both linear and residual income systems requires an investment of time,
money and effort. Some people use the following excuse to not create residual income: “It takes too
much money, time and effort.” That laziness of mind in the short-term means they’ll do a lot more work
and suffer a lot more pain over the long-term. They also overlook the fact that it isn’t even free to do a
linear-income job. To do a job you might have to invest each month:
• 160 or more hours per month at work plus 40 to 80 hours of morning preparation and
commuting.
• Childcare costs of around $600 (Australian) per child.
• Car travel costs of petrol & car-parking of, say, $200, or public transport of $50-$100.
• $50-$100 extra on food and drinks (at canteens and restaurants) than if you ate at home.
• $50 on miscellaneous others like extra car maintenance, work clothing, tools and equipment.
Hence, it might cost you roughly $50 to $1000 or more per month just to be an employee.

Another option for creating linear income: small business

The next option to create income that people tend to consider is to open their own small business like a
shop or a service/trade operated from home eg. carpet cleaning. It’s an attractive idea to be your own
boss. But it can be very risky if it involves bank loans of considerable sums. According to research from
the Employment Strategies Council, “about 40% of small businesses operate on the brink of closure and
only about 3% of small businesses will be hugely successful.” 2 According to Brian Sher, an Australian
entrepreneur, around 80% of small businesses fail in the first five years and a total of 96% fail in the
first nine years. 3
The other glaring problem is that these people are still in the trap of trading time for dollars. Quite
often, they become a prisoner of their business; spending a lot more time on it than if they had a job.

The low odds of long-term success with linear income

According to the Australian Bureau of Statistics, by age 65 less than 4% of Australians are considered
to be financially independent - that’s classed as having a retirement income of $36,000+ to live off p.a. 4
Similarly, the US Bureau of Labor Statistics reveals that only 5% of Americans retire with adequate
funds.
In other words, the standard formula that most people use, of working 40 hours per week for 40 years,
leaves them in a weak financial position. It is only because of tax-payer-funded schemes, like the age
pension, that the vast majority of people have money to survive in retirement. 5 However, the population
is aging. The number of tax-paying workers compared to elderly retirees is shrinking. It is expected that

2 - Paul Clitheroe, The Road to Wealth, 2001, page 443, Penguin Books, Victoria, Australia
3 - Brian Sher, What Rich People Know & Desperately want to keep a Secret, 1999, Pan Macmillan, Sydney.
4 - Statistics sourced from the Australian Bureau of Statistics and printed in: Paul Clitheroe, The Road to Wealth, 2001, pages 8 - 11, Penguin Books, Victoria,
Australia
5 - S. Kelly, Self Provision In Retirement? Forecasting Future Household Wealth, 2003, [CP2003_016], National Centre for Social & Economic Modeling, NATSEM
- University of Canberra, online at http://www.natsem.canberra.edu.au/pubs/cp03/2003_016/cp2003_016.html

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 4

within a few decades governments won’t be able to afford age pension schemes like they could in the
past. 6
To make matters worse, around 90% people are not saving enough in retirement plans (like
superannuation or 401k). 7 Australian finance commentator Paul Clitheroe states “we have got a major
crisis approaching.” 8 The U.S. Economic Policy Institute comments: “the average household has no
chance of ever reaching adequate levels of retirement wealth if current trends continue.” 9

Options for creating pipelines of passive residual income

Robert Kiyosaki’s “Cashflow Quadrant” identifies
the different options for generating passive-residual The Cashflow Quadrant
income. Let’s briefly review these and see how they Left Side: Right Side:
compare; to see if there’s one that is considered to be Linear Residual
the best option for the average person to start with. Income Income
A - Real Estate

E I B - Royalties
(eg. book, software,
Employee Investor
art, music)

S
C - Franchise or
B Corporation
Self- Business D - Kiyosaki's
employed Builder "Perfect Business"

Investor (eg. share market)

Knowing how to invest wisely, by making informed educated decisions yourself, is certainly a good
arena to get into. However, it’s expensive to start and can take a very long time before significant results
appear. For example, to earn $500 per month in extra income (that’s $6,000 per annum) you would need
to invest about $100,000 at an average return of 6% p.a.10 If you want $1,000 per month, then invest
$200,000. Do you have $200,000 to invest?
Investing can be very high risk. We’ve all heard stories about people who have lost large sums of
money because they gave it to financial experts to invest on their behalf. Consider that in the stock
market crash of the early 2000s several million people lost a combined $7 to $9 trillion dollars.11
In fact, studies show that the advice of financial advisors is not all that reliable. One study, titled How
well do financial experts perform?, found that: “financial experts are, on average, not so good at picking
profitable stocks… An overwhelming majority of day-traders lose money.” 12 As Robert Kiyosaki states,
stockbrokers are salespeople who “say what the [financial] institution tells them to say and promote, or
they lose their job.” 13 The advice is, if you want to increase the security of your stock market
investments, educate yourself and look after your own affairs. Of course, that requires a long-term
commitment to education and careful experience.

6 - Paul Clitheroe, The Road to Wealth, 2001, page 394, Penguin Books, Victoria, Australia
7 - Robert Kiyosaki & Sharon Lechter, Rich Dad Poor Dad – What the Rich teach their kids about money that the poor and middle class do not, 1997, page 124,
Cashflow Education Australia.
8 - Paul Clitheroe, in The Sydney Morning Herald, newspaper, 13 September 1997.
9 - Christian E. Weller, “Retirement out of reach: Financial markets will not generate adequate retirement income for average household”, August 2002, Economic
Policy Institute Briefing Paper #129, http://www.epinet.org/content.cfm/briefingpapers_bp129
10 - Paul Clitheroe, The Road to Wealth, 2001, page 94, Penguin Books, Victoria, Australia.
11 - Robert Kiyosaki & Sharon Lechter, Who took my money? Why slow investors lose and fast money wins, 2004, page 4, Richdad Australia.
12 - Patric Andersson, How well do financial experts perform? Stockholm School of Economics, Sweden. Consult my complete report Secrets of the Wealthy –
The Road to Prosperity for the full reference.
13 - Robert Kiyosaki & Sharon Lechter, Rich Dad’s Prophecy – why the biggest stock market crash in history is still coming, 2002, page 61-62, Techpress USA.

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 5

Real Estate

This is also an ideal area to be active in once you know what you are doing. However, it involves a
high level of risk too, involving large amounts of capital. To receive $500 per month in extra income
from real estate you would need to invest $200,000 in real estate property at a profit return of 3% per
annum. 14 Do you have $200,000 to invest in real estate or even just a deposit of say $20,000 to $40,000
so you can get a bank loan for the rest? And what if you did start building your residual wealth in real
estate and if the market turned against you?

Royalties

This is an option if you have the talent, the ideas, the skills, the capital and the long hours to produce
and release a best-selling book, music album or piece of software. I’ve spent 5 years running my own
record label and I’ve worked in a radio station in many roles ranging from disc-jockey to station
manager. I’ve met hundreds of musicians many of whom have received extensive radio airplay and
publicity. None make significant money.

Franchise/Corporation

Start-ups range from $20,000 to over $1,000,000. According to wealth-creation expert Robert Allen,
around 1/3 of franchises eventually produce decent profits. Another 1/3 fail and another 1/3 break even,
after many years. He states, "unless you’re going to own a string of five or more successful stores -
forget it."15 In other words, it’s expensive to get into and involves a pretty high risk of failure and
financial devastation.

There’s one option left to consider. Robert Kiyosaki calls it:

“The Perfect Business”

Why does he call it that? And why does he say that this income source can be “far
more secure than the stock market”? 16 Similarly, why does another best-selling
author of books on wealth-creation, Robert Allen, call it "Creating Wealth - The
Enlightened Way"? 17 Likewise, why has a former Senior Vice President to the U.S.
Chamber of Commerce and Presidential Senior Advisor, James Robinson, released a
book describing it as “The Next Major Profession”? 18

The answer to these questions is that, of all the options to create residual income, this method is the
most affordable and by far the most accessible to the average person. For instance:
• It involves low investments and is therefore low risk. The other options
discussed above involve investments of perhaps $20,000 to $1,000,000 or
more… just to get started! In contrast, with this “perfect business” model, you
can start building a pipeline of long-lasting residual income with a start-up
investment of as little as, say, $200 to $1500 US; or $400 to $2000 Australian.
That’s less than what it can cost each month to go to a job.
• If you choose a good system, you can do all of the business at home (or
wherever you choose) via email and phone.

14 - Paul Clitheroe, The Road to Wealth, 2001, page 94, Penguin Books, Victoria, Australia. Please note a ‘real’ return is the return in excess of inflation.
15 - Robert Allen, Creating Wealth - the Enlightened Way, 2002, page 24-25, Churchill Trust.
16 - Robert Kiyosaki, Retire Young Retire Rich, 2001, page 180, Techpress, USA.
17 - Robert Allen, Creating Wealth - the Enlightened Way, 2002, Churchill Trust.
18 - James Robinson and Dr Charles King, The New Professionals, 2000, Three Rivers Press.

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 • You are your own boss; you set your own hours; fitting it around your schedule.
• It can require as little as 7 to 10 hours of work per week over several years to build up an
impressive pipeline of long-lasting residual income. You can do it in your spare time, on the side
of a job.
• Unlimited income potential: The more work you do, the more your income can rise in
accordance. You increase your income through your actions and results.
• It has an ethical and fair income system. It is like a ladder. Everyone starts off at the bottom.
Based on your efforts and results, you can climb past those who started before
but who do less than you. Those who achieve the best results receive the most
income. Your income potential is limited only by your own activity and results.
• If you choose a good system and good mentors, you’ll receive comprehensive
training and support.
• It can also enable you to receive numerous tax advantages. You can claim
deductions for household electricity, gas, phone and internet, home-office
equipment, travel expenses (including motor vehicle, interstate, international),
training and educational expenses, your mortgage interest, bank fees etc. A home business puts
you in an optimum tax bracket. 19

If through a home business like this you developed an extra pipeline of just $6,000 p.a. ($500 per
month) in residual income that’s like having $100,000 invested in the share market (6% return pa)
or $200,000 in real estate (3% return pa).
Imagine you had $30,000 pa of residual income coming in from a home business. In terms of
asset-income that’s like having $500,000 in the stock market or $1,000,000 in real estate.
With a good home business you can achieve such asset-power for a mere fraction of the
investments involved with shares or real estate. Compare investing several hundred dollars to
several hundred thousand. That’s why this is called the “perfect business”.

How does it work?

A common misconception about this kind of home business is that you need to be a salesperson or sell
things to people face to face.
That’s not necessary at all.
What you can do is simply Client You Client

☺
provide information to
information information
people who want the benefits
of a particular product or
service that they can buy
direct from a third party payment payment
company. $ $
You can attract people to $ $
come to you by learning what $ $
to do online, or use flyers, products products
ads, brochures etc. You can
then send people the
information they request via
email, referring people to
)
websites and articles. Company
Thereby you can do all your
business at home without meeting anyone in person. That’s what I do. I use articles and online movies

19 - Refer to the Australian Tax Office publication Carrying on your business from home. Visit: www.ato.gov.au

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and audios to explain 95% of what needs to be explained. If you can send emails and have an OK
phone manner you too can do what I do and succeed, provided you are self-motived – more on that
below.
Here’s how you make money. After perusing the information, when someone wants to buy something
they can send their payments direct to the company (via website or phone) or to you. The company ships
the products direct to that customer. Because they can only order using an ID number, your ID number,
you are allocated the commissions for being the referral agent; you’re the person who linked the
customer to the company.
The ideal is to market consumable products/services that are used up each month. That way you’ve
linked someone to the company once, they re-order products month after month and you receive income
long-term. In other words, you do the work once and receive income long-term. That’s residual or
passive income. And as we saw above it is the formula for creating wealth and financial freedom.

Leverage: a key for success

Now here is where it can get really interesting. Let’s say some of your client’s are so passionate about
the results they receive from the product. For instance, maybe they shed that fat they couldn’t lose
otherwise; or their skin looks younger; or they have more energy; or a long-term health complaint
improves; or they are otherwise happy about getting better value for money than they did previously.
They realise that there are lots of other people out there who want this too. Let’s say you coach just two
of these people, Mary and John, to do what you do – to distribute information. Your reward for helping
them is that as they become successful you receive a commission for coaching and helping them
succeed.

Leverage:
If you coach 2
people & so do
they & so on
your business
and customer
network grows

You

Mary
☺ John

$
$ $ $
$
$ $ $
commissions

products
) products

payments Company payments

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 The nearby diagram below shows how your network can grow if Mary and John find two customers
each and so do those people and so on. If each of these people puts in just 7 hours per week to grow their
business, and if there are 50 people in your network then that is 350 hours each week working for you.
Can you work 350 hours per week by yourself? Only through a network is this possible. This is called
leverage and it is another essential element for creating true wealth. In other words, a key to
becoming wealthy is to help others achieve success too.

• If you each sponsor just 2 people then after 4 duplications you’d have 30 product users in your
network that you could earn commissions from.
• If you each sponsor just 3 people then after 4 duplications you’d have 120 product users in your
network that you could earn commissions from.
• If you each sponsor just 4 people then after 4 duplications you’d have 340 product users in your
network that you could earn commissions from.

Fairness: Of course, if someone in your

network sponsored more customers and business
partners than you do, then they should earn more
than you; which is only fair, right? That doesn’t
mean that your income would shrink, in fact it
grows too, but theirs will grow faster.
Likewise, if you do more and produce more
results, building a bigger network than people
who started before you, you’ll earn more than
them. Can anything be fairer than that?
There is no fixed hierarchy as there is in the
corporate workforce where the CEO always earn
more than management, who in turn always earn
more than base level staff.
The fairest form of
Their Sponsor
income known?
Your Sponsor
You.
If you build a bigger network (ie. produce more
results) you’ll earn more than people who started
before you. I do! You can raise your income each
time you produce more. Contrast that with jobs
where your income is capped by your bosses,
who might produce less than you, yet who always
earn more & who also control what you can earn.

Comparison of 4 Ways to Create Wealth

Consider this table (with discussion overleaf):

Investing Job Small Business The “Perfect

@ 6% PA (After 4 years tertiary or Franchise Home Business”
study)
Type Residual Linear Linear Residual
Hours 0-10 PW 35-60 hours PW 30 to 80 hours PW 7 to 10 hours PW, choose time.
Startup $10,000 Study: $40,000 plus Could be over $1 $2000 (spread over 12 months)
Invested (over 4 years) million! We’ll use for Though could be from $500 upfront to
example $200 K $5,000 spread over 12 months.
Growth 6% PA Promotions Steady, intermittent 150% PA though far If 200%
growth higher is possible growth PA
Balance Profit Balance Profit Balance Profit Balance Balance
1 year 10,600 $-10,000 $-10,000 $20,000 $-180,000 $2,000 $0 $0
2 years 11,236 $-10,000 $-20,000 $20,000 $-160,000 $3,000 $3,000 $4,000
3 11,910 $-10,000 $-30,000 $30,000 $-130,000 $4,500 $7,500 $12,000
4 12,624 $-10,000 $-40,000 $40,000 $-90,000 $6,750 $14,250 $28,000
5 13,381 $30,000 $-10,000 $40,000 $-50,000 $10,125 $24,375 $60,000
6 14,184 $30,000 $20,000 $50,000 $0 $15,187 $39,562 $124,000
7 15,035 $40,000 $60,000 $50,000 $50,000 $22,780 $62,342 $252,000
8 15,937 $50,000 $110,000 $60,000 $110,000 $34,170 $96,512 $508,000
9 16,893 $60,000 $170,000 $70,000 $180,000 $51,258 $147,770 $1,020,000
10 17,906 $60,000 $230,000 $80,000 $260,000 $76,887 $224,657 $2,044,000

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 9

Discussion of return on investment after 10 years

Please note that this is, of course, a rough though certainly useful guide based on realistic data. There
are myriads of variables that could affect the outcomes of the projections.

Investment (in bank, shares or real estate) @ the high return of 6% PA:
• Startup investment: $10,000
• Projected balance after 10 years: $17,906.
• Time invested per week: varies greatly depending on investment vehicle.
• Risks: the market you’ve invested in collapses. In that scenario, if you invested $10k in real
estate and took out a large loan like $100k or more, you could be in dire straits.

Job after tertiary study for 4 years at university or college:

• Startup investment: $40,000 ($10,000 or so per year in fees, expenses and tuition 20). I did this
(many years at university) and if I knew then what I know now, I probably wouldn’t have!
• Projected return on investment (or balance) after 10 years: $230,000.
• Projected break-even point on investment: Year 6.
• Time invested per week: 35 to 60 hours including commuting and daily preparation.
• Risks: Globalisation means many jobs are increasingly going to third world countries. Just one
accident or a bout of serious illness could leave you unable to work full-time and therefore
unemployable long-term.

Small Business/Franchise:
• Startup investment: $200,000 in this example (eg. for a small video rental franchise). Note that
starting a traditional business or franchise can range from say $20,000 to over $1,000,000.
• Projected return on investment (or balance) after 10 years: $260,000.
• Projected break-even point on investment: Year 6.
• Time invested per week: 30 to 80 hours including commuting and daily preparation.
• Risks: Remember the notes above that around 80% of businesses close down by the fifth year
mark and 96% don’t make it to a decade. If your business is one of the majority that does not
survive, you could lose your house and relationships.

Home Business Networker:

• Startup investment: $2,000 (either at once or spread out over 12 months; though it can vary from
$500 to $5,000, depending on the vehicle)
• Projected return on investment (or balance) after 10 years: based on a low profit in year 1 of
$2,000 it would be $224,657 from 150% growth PA* or $2,044,000 from 200% growth PA.
Earning $2,000 in year 1 is very achievable in some companies with a small network that grows
to just 10 to 20 people by the end of year 1. * Note: 150% growth in a network is very
conservative. It predicts that a network of 10 people at end of year 1 grows to just 15 people
overall at end of year 2. Whereas if those 10 people sponsored just 2 people each in 1 year your
network would actually be 30 people at end of year 2. I point this out to show that my example
here is quite a conservative projection. I have had networks grow by 20 people per week.
• Projected break-even point on investment: first or second year. In fact, some (hard-working)
people even earn into five or six figures within their first year.
• Time invested per week: 7 to 10 hours per week in your home, choosing your own hours. Ten
hours would wisely consist of about 40 minutes per day on the phone; 20 minutes sending
emails; and 3 hours per week in helping your colleagues, enhancing your skills and other
business development.

20 - See http://www.usc.edu.au/Students/Future/FeesandCosts/2006Fees/ for examples of university fees for courses in

Australia. Examples per full-time year: Law $9,861; Medicine $23,971; Computing: $14,613; Nursing: $14,187.

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 10

 • Risks:
o You join an unproven company that closes down as 95% or so do in the first five years
(due to low-appeal products and lack of repeat orders; unviable or non-existent marketing
systems; a low-commission income plan; or bad management).
o Assuming you join a viable company, the main risk is that you don’t nurture a wealth
mindset of patience in yourself and others. In other words, if you expect quick riches you
may give up in your first few years and miss out on the compounding that leads to a very
large residual income if you simply plod along for a few more years.
• For more details see my 26-page eBook How to Compare MLM Network Marketing Businesses
available for free from www.HowToCompareMLM.com

Conclusion

Of all options discussed, it seems that a home business (that creates leverage via a network) can produce
the greatest return of investment with the least amount of effort. That’s not to say that it does not
require significant effort to be successful – for it does!

If this is so “perfect”, why isn’t everyone doing it and succeeding at this?

Firstly, because it is so easy and affordable to start one of these

businesses many unsuitable people pay a set up fee and then do little
or nothing at all to grow their business. It’s easy come and therefore
easy go. Some of these people are get-rich-quick-dreamers who
delude themselves with illusions of vast amounts of fast money for
little effort. They don’t have the long-range wealth-mindset (the
patience and commitment) that is required for building pipelines.
They don’t learn what to do, or if they do, they don’t apply it long
enough to get the very impressive results that come with time.
The fact is not everyone has the self-discipline to be their own boss. Being your own boss means
setting your own goals and being committed to achieving them. You need to motivate yourself to put in
the necessary time and effort. In contrast, it seems some people need to have a boss to order them about.
For otherwise, distractions or obstacles get the better of them. Hence, if you need a boss to order you
about, a home business is probably not for you.
Another major problem is that whilst there are several excellent companies available to associate with,
that are proven and are viable long-term, there is a far larger number of shonky businesses out there:
95% or so of them shut down within less than 5 years of start up. Sadly, many people don’t know how to
assess and compare ventures, they don’t do adequate research and they rush into a bad one.

For more information

• See: www.HowToCompareMLM.com for the 26-page eBook
How to Compare MLM Network Marketing Businesses

• See www.WealthFormulaMovie.com - 10 minute animation: includes concepts covered in this article.

• See www.WealthLeverageMovie.com - 25 minute animation: how leverage is a key to true wealth.

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 11

The master plan for achieving financial freedom
• A/. Have a good low stress job (40 hours per week maximum) with a view to working in it for
about 5 years.
• B/. Allocate 7 to 10 hours per week for a networking business with a proven viable company:
o Past 5 years of growth, high demand products that produce visible results quickly (weight
loss, younger skin); and pays volume commissions of 4% or more.
• C/. After several years start to invest your profits into real estate and shares to create multiple
streams of income. Aim to have a new investment property every several years aiming for 5 or
more in 10 years time.
• D/. As a long-term backup plan invest $10,000 or so in a 6% PA savings account which will
yield $57,416 after 30 years. That could come in very handy as an emergency fund in your old
age.

Above all: don’t go into debt to buy fancy toys, “stuff” and other liabilities. Don’t be tempted to buy a
flash car or boat or larger house that you can’t really afford just to impress other people. Because doing
so will imprison you long-term, maybe forever, in poverty and middle-class cashflow cycles. Instead
exercise patience and wisdom: wait until you have income from assets that enable you to afford those
luxury items without the bad debt.

Copyright Robert Ryan 2003-07, BSc, Dip IT, Dip Pa.

In two and a half years I replaced the income from my I.T. job with a pipeline of
residual income by working 7-10 hours per week at home.
Review the above links and email or call me for more details.

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 12

Appendix: reality check – how financially secure are you?
“Take responsibility for your finances or take orders all your life.
You’re either a master of money or a slave to it.” Robert Kiyosaki 21

Spending 5 minutes on this self-questionnaire could be one of the key points of your financial life.
If you have yet to do so, print this article now, grab a pen and have fun …

1/. What is your Number One priority from the following options? Please tick or circle one.

Financial Freedom Extra income Have my own business

Having more free time Personal development Helping others
Meeting new people Better Health Retirement

2/. Why did you choose that one?

3/. Why is that important to you?

4/. What are the consequences of not achieving it?

5/. Does that worry you? If so, why?

6/. Do you have only 1 source of income of more than a few hundred dollars a week?
[ ] Yes or [ ] No

7/. If you lost that (main) source of income tomorrow, how long could you maintain your current
standard of living?
[ ] 1 week [ ] 1 month [ ] 3 months [ ] 6 months [ ] 1 year [ ] other: ______________

8/. How long would you be able to survive without becoming dependent on government welfare or on
family and friends? [ ] 1 week [ ] 1 month [ ] 3 months [ ] 6 months [ ] 1 year
[ ] other: ______________

9/. For how many years have you been working? _______________

10/. Having worked that long, how much are you currently worth in assets? In other words, what amount
of money do you have invested in residual income businesses, real estate properties, shares or
superannuation retirement funds?
[ ] $0 [ ] $5000 [ ] $10,000 [ ] $100,000 [ ] $ 200,000 [ ] $500,000 [ ] $1,000,000
Other: ____________

Note: do not include the money locked in your own home because it is not an asset – it does not create income for you.

21 - Robert Kiyosaki, Rich Dad Poor Dad – What the Rich teach their kids about money that the poor and middle class do not, 1997, page 180

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 13

11/. To retire with an annual income of $52,000, you will need $866,666 in net asset value, returning at
6% per annum. In other words, that’s $52,000 / 6% = $52,000 x 100/6 = $866,666 required in net assets.
Considering the financial path you are currently on, what do you think your net asset value will be at
retirement age of 65?
[ ] $0 [ ] $5000 [ ] $10,000 [ ] $100,000 [ ] $ 200,000 [ ] $500,000 [ ] $1,000,000
Other: ____________

Again, to be honest with yourself do not include the value of your home – it does not create an income stream for you.

12/. To project your annual income for retirement, divide that asset figure by 16.666 (just as $866,666 /
$52,000 = 16.666) What does that indicate your annual income will be? ________________
(Hint: $100,000 of assets / 16.666 = $6000 p.a.)

13/. Is what you are currently doing financially going to give you the lifestyle you truly desire within,
say, 5 years? [ ] Yes or [ ] No

14/. What would you like to be doing five years from now? Would you rather be:
[ ] working 40 or so hours per week in a job like your current one or [ ] doing other things instead
like: _________________________________________________________________________
(write what you’d rather do with your time)… because you have created residual income streams (from assets)
so that you don’t have to work jobs anymore if you don’t want to.

Copyright: This document, as are all OptimaSystem resources or others bearing the author name
Robert Ryan, is protected by copyright law and contains proprietary information. Unauthorised
reproduction or distribution of this material (in whole or in part) is illegal and will likely result in
severe civil and criminal penalties, which will be prosecuted to the maximum extent under the law.
Copyright 2002-07 & onwards Robert Ryan, BSc (biology, human health), Dip IT, Dip PA.

Disclaimer: This article is intended for educational purposes only and it is not a substitute for
professional or medical advice. The author of this report, Robert Ryan, is not a financial planner,
adviser, registered accountant or financial professional. The information presented is based on his
personal experiences as an employee, businessperson, researcher, entrepreneur, coach, investor,
and others people that he has modelled in detail. You may have to modify, do further research or
adapt it to suit your personal financial situation. Any information presented is given purely as an
illustration and should not be construed as a specific investment recommendation. The laws relating
to investment, taxation, benefits, and the handling of money are constantly changing and are often
subject to changes in government policy. Whilst every care has been taken to ensure the accuracy
of the material contained herein at the time of publication and presentation, neither the author nor
the publishers will bear any responsibility or liability for any action taken by any person, persons or
organisations on the purported basis of information contained in this report. Without limiting the
generality of the foregoing, no person, persons or organisations should invest monies or take other
action on reliance on the material contained in this report or any support material, but instead
should satisfy themselves independently (whether by expert advice or otherwise), of the
appropriateness of any such action. If you spot any errors in this report, please inform the author so
he can correct them.

Copyright Robert Ryan 2002-07, www.AboutRobertRyan.com - Em: robert@aboutrobertryan.com 14