Building an MLM business or saving: What is the better retirement plan ? Today I want to start with a warning: This post is going to be a bit dry for some of you 
.
But the message will be interesting, so please keep reading.
As some of you may know from former posts, I’m a financial planner by profession and planning my client’s retirement was part of my service in my traditional business.
Saving for retirement has always been a necessity – and the current development regarding public pension systems in industrialized countries and the outlook on financial markets don’t make this challenge for people easier to solve – at least with traditional methods.
So let’s do the math together.
A 40-year-old person wants to have an extra amount of 3,000 $/2,310 € as monthly payout from a savings plan at the age of 67 – which is at least in Germany the official retirement age. 1 US-$ equals 0.77 € in the moment of writing.
First thing to consider is inflation, let’s assume 3 % per year which is pretty moderate.
So this person will need 6,664 $/5,131 € a month in 27 years from now on – after inflation.
Don’t believe it ? That’s the power of compounding. Slightly different inflation rates can lead to hugely different results, by the way.
How long will this person live ? Actually depending on the gender, let’s assume a life expectancy until 95 for the purpose of this illustration.
If this person is able to invest his or her money with an annual yield of 6 % (that means 3 % after inflation), he or she needs 1,500,000 $/1,200,000 € at the age of 67 to generate a monthly payout of 6,664 $/5,131 € until the age of 95 – and the capital will then be gone.
How much will this person need to save on a regular monthly basis, consistently – from now on?
OK, stay seated: 1,850 $/1,420 € per month if we assume an annual yield of 6 %.
Disclaimer: That’s only a rough illustration and not a state-of-the-art retirement plan. Please seek competent advice from a trusted financial advisor to do your own math. Other components like taxes, fees and potential market crashes need to be taken into consideration. Chances are that a yield of 6 % per year is way too optimistic…
We don’t know if these 1,850 $/1,420 € per month are really true because we’re talking a lot about the future, but do you agree with me that any amount between 1,500 $ and 2,000 $/1,160 € and 1,540 € is pretty ambitious ?
If so, how many people would you need in your MLM business to generate a residual income of 3,000 $/2,310 € ?
Well, if you are with a company that has a good compensation plan, you need between 150 and 200 people on your team actively ordering product every month.
Even if you take inflation into consideration, that would mean that the company’s product prices never would rise, you would need between 350 and 400 people on your team – a team built within 27 years until the age of 67.
So what is more likely, to save 1,850 $/1,420 € a month for the next 27 years or to build a team of 300 to 350 people within the next 27 years in a good MLM Networking business ?
The beauty about this type of retirement plan is that it pays you while saving, oh sorry, building your business. And if you choose the company properly, it’s true residual income.
I’m fully aware that we’re only comparing figures here, so please don’t take any spontaneous decisions.
Listen to my words: Seek competent financial advice that is tailored to your individual situation in your specific country. And of course, building an MLM business is not without risks, as we all know. Just as investing.
What is your opinion ?
I always love your reaction, so please leave me a comment down below with questions, thoughts, or feedback.
And (yes, here’s my call to action) please share this post with your Twitter and Facebook friends by clicking on the share buttons.
I appreciate you telling others.
To a prosperous life,
Oliver Tausend
+1 201 984 5664 office North America (anytime)
+49 1512 9125216 office Germany & other countries (anytime)
Skype ID: guernsey2016 (anytime)
wordpress@olivertausend.com
How to apply the Sixth Sense in your MLM business
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Twitter: prfuller
says:
Hello Oliver
You know I like numbers
Here is the thing, the numbers are scary. When someone sits down and does the math and works out a plan they will realize that they just will not have the type of cash flow they will need to live the retirement they want.
The solution -> Talk to Oliver about starting your own business.
Cash flow is king!
Peter Fuller MBA recently posted..Does your Retirement Plan include Jumping out of a Window
[Reply]
Oliver Reply:
July 29th, 2010 at 21:21
Hi Peter,
I know that you like numbers – even if they are scary
And they are scary.
Without some type of leverage it will be very hard for someone who’s 40 year old to build up enough assets for their retirement.
MLM Networking can be one type of leverage.
So thanks for your recommendation
Take care
Oliver
[Reply]
Hi Michael,
with 24, these numbers look a little bit different. The componding effect is tremendous. If you do MLM properly, your business once built should pay you on an ongoing basis. If you were able to generate additional income streams from assets like real estate – even better.
Congratulations for having this information in your young age. Take care of your gift of youth.
Cheers
Oliver
[Reply]
Twitter: stephensheather
says:
Hey Oliver!
I recently had a conversation with someone on my team who was frustrated with the $200 she was earning every month on reorders in her business. We both were amazed when we realized that in order to earn $200 a month residual through an investment she would have to have $24,000 invested earning 10% return. I was floored when I saw the actual numbers on paper.
Not even thinking about retirement, this was so inspiring to me. I would think by experience that it’s super important to have a consumable product if you’re going to bank on the residual income from repeat orders, if someone wanted to focus on this as a retirement goal…and of course that they’ll actually have to work and build their business. There is something to be said for having the retirement savings coming out of a paycheck automatically before you even see it…especially for those people who are out there buying hope, and unwilling to pay the price of consistent hard work.
I’ve not listened to this in years, but I’ve got a foggy memory that the cd: 4 Year Career by Richard Brooke has some good information on this.
Thanks for sharing your skills with me and helping me to think beyond next week’s paycheck.
Heather
Heather C Stephens recently posted..Tracking Blog Stats & Marketing Trends for WAHMs & Mompreneur Businesses
[Reply]
Oliver Reply:
July 30th, 2010 at 17:50
Hi Heather,
and 10 % p.a. are a lot ! That’s definitely an interesting point of view…
You are right, it’s not about retirement at 65 or 67, because MLM allows us to retire at younger ages. In order for that to come true, we need consumable products, that’s also my idea.
Thanks for great initial comment on my blog.
Come back soon and take care.
Oliver
[Reply]
Hi Oliver i love these number crunching scenarios myself.
One rough rule of thumb is that $100k will return around $8k per year for 20 years then its all gone-kapput! Obviously the 20 year time frame will wreck havoc with the buying power of $8k after inflation.
Whilst I’m not an mlm-er I concur with the sentiment. Passive income rules! A modest $8k per year residual and perpetual business income is as good as $100k in the bank.
Much more compelling for the big dreamers is that by extension an $80k passive income equates to $1 million!
Cheers Kiaran
[Reply]
Oliver Reply:
July 30th, 2010 at 17:42
Hi Kiaran,
thanks for your comment. I’m glad that you like crunching numbers
At the end of the day, it all comes down to using leverage properly. And MLM is one form of using leverage. Others are real estate for example.
And it’s about cashflow
Take care
Oliver
[Reply]
Hi Oliver,
I have always thought that passive income was the way to go, but have never looked at the comparison between it, and the returns on other types of investments.
Thanks for putting the two together..very interesting.
Neil
Neil recently posted..Premium Themes For WordPress and Socrates
[Reply]
Oliver Reply:
July 30th, 2010 at 23:50
HI Neil,
thanks for your comment. I’m blad you find my post helpful and interesting.
Take care
Oliver
[Reply]
Twitter: MavisNong
says:
Interesting post with scary figures, Oliver.
It’s important to have a good retirement in place. You need more than savings to retire comfortably.
Yes, a network marketing business offers great returns and can allow you to retire rich
Thanks for sharing your insights.
Have a great weekend!
All the best,
Mavis Nong
[Reply]
Oliver Reply:
July 30th, 2010 at 22:47
Hi Mavis,
thanks for your comment. We need especially more than savings in order to retire early and rich
That what it’s all about.
Come back soon and take care
Cheers
Oliver
[Reply]
Hey Oliver,
You spoke my language. I love numbers, so I didn’t find this dry one bit.
Those numbers really are a shocker. More people need to take a closer look to what their options are. Plus it’s better to plan for it now versus waiting to the last minute and being in trouble.
Have yourself a great weekend,
Jerome Ratliff
Jerome Ratliff recently posted..Simple Way to Build Your Marketing System
[Reply]
Oliver Reply:
July 30th, 2010 at 23:48
Hi Jerome,
I’m glad you can relate to my post and the shocking numbers. Well, the numbers are as they are. It’s about how respond to them. Our response will decide whether we will be on the right or on the wrong side at the ende of the day.
A great weekend to you too, and thanks for your comment.
Take care
Oliver
[Reply]
Oliver,
It is quite scary that many people never look at numbers like these and don’t take much into consideration when they paln out their future. The really sad part is that most people around my age ( mid 30′s) see their parents and grandparents limp through life just to end up pinching pennies and cutting coupons. This is not the way retirement is painted to us in school and it should n’t be rough.
I do beleive that having a online business and being an entrepreneur will take many of us well beyond our wildest dreams, we will have great stories to tell and they will write books about us.
We are in a age that we CAN control the outcome of our future, we just need to take actions to get us there.
[Reply]
Oliver Reply:
July 31st, 2010 at 18:48
Hi Robert,
thanks for your lengthy and thoughful comment. I appreciate it.
Come back soon and take care
Oliver
[Reply]
Very thought provoking post (once again) Oliver. These days it it extremely difficult to put any form of cash aside into some form of “traditional” savings, people simply do not have disposable income.
It really makes sense to get some sort of home business started to create this disposable income. It need not necessarily be network marketing. It can be some sort of offline business as well.
The secret to successful retirement is that once you are creating the additional income, you need to SAVE it. This is where most people make their mistake. Almost everyone will use the extra cash for luxuries they could not afford before.
Instead, they should be settling their debt as fast as possible & then pump the extra into some form of savings.
Of course, residual income stays the best plan as you can still be paid way into your retirement for work you’ve done years before!
Stay inspired!
Michael
Michael B Wilbraham recently posted..How To Connect Your Blog To Your Facebook Profile- Groups & Fan Page
[Reply]
Oliver Reply:
July 31st, 2010 at 18:47
Hi Michael,
I embrace your advice not to spend additional income for luxury goods but rather invest it.
Thanks for additional ideas and your comment.
Take care
Oliver
[Reply]
Twitter: AnaTrafficCafe
says:
Very interesting approach I must say, Oliver.
I do agree that traditional way of saving for retirement just doesn’t work the way it’s supposed to.
However, I also think that working for 27 years building a team for the same company and ending up with 300-350 PRODUCING team members sounds like a dream as well.
Not impossible of course, but…
What do you think, Oliver?
Ana Hoffman
Ana | Traffic Generation Cafe recently posted..Does NoFollow Follow
[Reply]
Oliver Reply:
August 1st, 2010 at 22:00
Hi Ana,
thanks for your comment – what is your “but” ?
Take care
Oliver
[Reply]
MLM Network Marketing there is no other competitor. Great career for anyone that luvs to get paid for their enery and time what they are worth. Residual Income – do the work now and get paid do the work now and get paid. wake up oneday and the seeds you planted 1 year earlier well they grow & mature into Great Leaders. Wake up and never have to work again. Quaity vs quantity. You can build any type of mlm network marketing business if you have the right MINDSET to carry you thru the rough times and yes there are many bumps on the road.
MINDSET!
Keep your eye on the end RESULT.
luv your post Oliver!!
MariaEves recently posted..How to Message Facebook Fans
[Reply]
Oliver Reply:
August 1st, 2010 at 22:04
Hi Maria,
thanks for your comment. I’m glad you were able to relate it. Just a sidenote: I don’t see a contradiction between quality and quantity – I can’t really tell from your comment if you do. I say: Learn to manage quality as you increase quantity. In any case, you need the right mindset.
Take care
Oliver
[Reply]
Twitter: steveshoemaker
says:
Oliver,
Very relevant post for us and to keep us motivated at what we are doing.
These numbers are scary but I can have a positive outlook because of a little thing called leverage.
Things I do now can pay me well into the future not to mention the potential to make massive money now that I can invest and diversify with the goal that one day the money will work for me and not the other way around.
Here’s is to more burning the midnight oil,
Steve Shoemaker
Steve Shoemaker recently posted..Strategic Branding- More Face On FaceBook
[Reply]
Oliver Reply:
August 1st, 2010 at 22:05
Hi Steve,
you mention the decisive word: Leverage. It’s leverage that makes us humans stronger than animals even if we are physically weaker sometimes.
Thanks for sharing that.
Take care and come back soon
Oliver
[Reply]
Oliver,
I’ve never been the type of person to dwell on numbers, to over think my finances, or to really spend too much time making plans for the distant future. The benefits, both long term and short, of this industry are the daily infusion and sharing of knowledge, building relationships and empowering others. If I am successful in those areas, and act on what I have learned, I have faith that my financial future will be secure.
Karen recently posted..New Career Mindset
[Reply]
Oliver Reply:
August 2nd, 2010 at 19:43
Hi Karen,
thanks for sharing your ideas. I fully agree that the mindset you describe is crucial for longterm success in our industry. Without this attitude, the best plan in numbers won’t get you very far.
Come back soon and take care
Oliver
[Reply]
Hi Olivier,
How are you?
That’s really a great post. Build a MLM network marketing business i definitively the best plan for the retirement!
Have a good week end.
Guillaume
Guillaume recently posted..Do you have the good Mindset right NOW
[Reply]
Oliver Reply:
October 10th, 2010 at 13:11
HI Guillaume,
thanks for your comment. I’m doing great – yourself ?
The numbers look a little bit more friendly than those of a saving plan, don’t they ?
Take care
Oliver
[Reply]
It’s posts like these which motivate me to develop myself and my opportunity.
Saving alone just doesn’t cut it. Saving while running a business which receives increasing sales over a period of time is the way to go. Residual all the way.
[Reply]
Oliver Reply:
January 15th, 2011 at 16:40
Hi,
I couldn’t agree more !
Thanks for your comment.
Cheers
Oliver
[Reply]