Princess Leia owns an apple
farm.
Luke is the CEO of the farm.
A team of one hundred Rebel
Troopers works the farm.
Rebel Troopers earn $20
per hour worked.
We use this formula to calculate
their income: Paycheck = (hourly pay) x (hours worked)
If Troopers work 40 hours per
week, that would be 20 X 40, which equals $800.
Rebel Troopers are commonly
encouraged to save their extra money by depositing it into a bank.
Their investment follows this
equation: Savings benefits = investment X annual interest
The problem with “the
paycheck formula” or the “bank-savings formula” used as
mechanisms to wealth is that the variables are limited and out
of the Troopers’ control.
·
Troopers
cannot work 3,000 hours in one week.
·
Troopers
cannot force Luke to pay them $1,000 per hour.
·
Troopers
cannot ask the bank to give them a 3000% return.
There are only 24 hours in a day
and only a few active years in a lifetime.
Solution?
Young Troopers are told to go to
college so they can increase their PER HOUR rate from $20 to, say, $100 or
$300.
The problem remains because TIME
CANNOT BE SCALED.
So, to answer your question, how
do the rich earn money if it’s not exchanging their time for money?
The rich exchange scale able units
of value that are not linked to time.
Let’s return to Princess Leia’s
Apple farm.
Leia’s income equation is: Profits
= Profit per Apple X Apples Sold.
This is where things change.
Princess Leia can SCALE a
part of her income equation. There are millions of people on the planet that
want/need apples.
Additionally, Leia can CONTROL her
farm operations. She can instruct Luke to play with pricing, sourcing, and
other operations of her farm.
So if Leia sells 100,000 apples
at $0.50 profit each, she just earned $50,000.
1.
If
Luke does a good job and improves efficiencies, Leia can increase her profit
per apple from $0.50 to 0.60, turning an $10,000 additional income.
2.
If
they have a good season and trees produce 10,000 more apples, she just made
$5,000 more.
3.
If
Leia can buy her neighbor’s farm, she can duplicate her income in a matter of
months.
This is a very simple example,
but the same scale able variables exist in everything
Princess Leia works for which usually come from these three main categories:
·
Owning
a Business
·
Real
Estate
·
Stock
Investing
Notice, these are NOT earned
income (job).
There are seven common streams
of income:
1.
Earned
income
2.
Profit
income
3.
Interest
income
4.
Dividend
income
5.
Rental
income
6.
Capital
gains income
7.
Royalty
income
All of these, except earned
income are scale able and controllable in
one way or another.
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