Passive Income Secrets

The Essential How-to Guide for Creating Financial Freedom and Living the Life You Have Always Wanted!

Table of Contents

Introduction

Chapter 1: You Can Start Now

Chapter 2: The Berkshire Hathaway Model

Chapter 3: What is Passive Income?

Chapter 4: Essential Elements of a Passive Income Portfolio

Chapter 5: Define Your Goals

Chapter 6: The Steps for Successful Transition

Conclusion

Introduction

I want to thank you and congratulate you for downloading the book, “Passive Income Secrets: The Essential How-to Guide for Creating Financial Freedom and Living the Life You Have Always Wanted!”

This book contains proven steps and strategies on how to start building your own portfolio of passive income sources.  No matter what your financial status may be right now, you can definitely control your own life and create the financial freedom that you have always wanted for yourself.  You need to know that you have the power to bring abundance and success in your life.

Thanks again for downloading this book, I hope you enjoy it!

Chapter 1: You Can Start Now

Over the past few years, Passive Income has become a buzz word.  There have been a lot of articles in the internet written about the topic.  So what really is Passive Income?  Yes, it can be an important tool that can give you the financial freedom that we all aspire for.  But more than that, passive income is a system that will require both time and effort from you.  You will need to perform initial research and quite extensive preparations.  When you are able to do so, your passive income will allow your money to work for you while you stay at home, travel around the world or even while you sleep.

Many people have this thinking that the only way for them to earn income is by working for it.  This kind of thinking is based on the linear income model.  Currently around 95 percent of people in Western countries continue to follow this income model.  Whether they work inside an office or in other professions, they will have to wake up in the morning, travel to their workplace, and spend their time in exchange for the paycheck or the income that they will earn.  If they fail to go to work, their income will be diminished or completely evaporated.

Many people start thinking of passive when they have already retired or are nearing retirement age.  They normally look for ways on how to continue earning income even when they are no longer eligible to join the workforce because of their age.  But you do not really have to wait until old age to aim for financial security.  As a matter of fact, you should begin working on it as soon as possible.  Even if you are currently working on a job that you truly enjoy, you should aim to have financial freedom that will enable you to work because you want to work and not because you have to work.

Payday loans have become rampant in the previous years.  More and more people are relying on payday loans to make their ends meet.  Even with the exorbitant interests and fees that they incur, a lot of people choose payday loans as an easy way to manage their finances.  They realize too late that they are relying more and more on payday loans and have been getting multiple payday loans at a time.  Before they know it, they are already in a much worse financial situation because of their enormous debts.  If you are one of these people, there is good news for you.  There is a way out of this financial mess.  You, too, can achieve financial freedom.  You just need to realize that it will take time and a lot of effort from you.

You do not really have to let go of your day job because any successful passive income requires enough preparation time.  You need to meticulously plan how you can achieve financial security.  Just always remember that no matter at what financial status you may in right now, you can always choose to begin the journey towards financial freedom today.

Chapter 2: The Berkshire Hathaway Model

Before we continue discussing Passive Income, I think you will appreciate learning about the secrets of Warren Buffett in bringing success to his company Berkshire Hathaway.  Back in the 1960’s, the value of Berkshire Hathaway’s stocks was only at $8.  Today, the value of the company’s stocks is more than $100,000.  In one of his current shareholder letters, Warren Buffett explained how he and the management team focus on two value “buckets” for the company.  The 1st bucket is composed of several operating businesses that Berkshire Hathaway owns a controlling stake while the 2nd bucket is composed of other investment vehicles such as stocks, bonds and mutual funds.

The two-bucket strategy gives Berkshire Hathaway the following two key benefits that allow the company to achieve success:

1. When the stock market crashes down, Warren Buffet is able to depend on the cash inflows produced by the various operating businesses of the company.  He can then use part of those cash inflows to re-deploy funds into the stock market and buy stocks or other assets at a very cheap price.  This will not have been the same case had Warren Buffet decided to put all of the company’s funds into mutual funds, stocks and bonds.  When the stock market crashes down, the value of all these holdings will come crashing down, as well.  He would have been compelled to sell some of his investments which were already under-valued in order to purchase other assets or investments that were even more under-valued.

2. Except for the operating businesses with parent holding companies who have public stocks, all the other operating businesses owned by Berkshire Hathaway are basically shielded from day to day appraisals.  This fact makes those operating businesses to have a lot more secure net worth and projected value in the private market.  Stocks, bonds and mutual funds can have very volatile market value.  This is the reason why banks and other credit institutions are more inclined to offer long-term loans with fixed rates to a more established and secure business who owns real assets like factories, buildings, retail stores and vehicles.  A company whose majority of assets is invested in a portfolio of stocks, bonds and mutual funds may not be able to enjoy such debt leverage.

You can apply the same two-bucket strategy in your own life. You will be able to find it a lot easier and quicker to increase your personal net worth when you create two sources of income – active income and passive income.

For a lot of people, their day jobs are considered as their principal “operating business”.  No matter what your profession may be – teaching, firefighting, accounting or even as a part-time restaurant waitress, your income from your day job enables you to pay your monthly rent and utility bills, buy your groceries, pay for your other necessities.  This source of income can also provide you with the actual capital that you can use to get into real investments.

You need to treat your finances as your own business and as a business owner, you would want to make sure that you are able to increase your profits, which in this case are your income from both active and passive sources, while using the most minimum investment required.  If you will be given a choice between working extended hours as a waiter to earn more money and continuing your studies to become a licensed physician, which will you choose?  Well, you may choose continuing your studies because it can allow you to have more earnings in the future compared to working in double or triple shifts as a waiter.  And here you will learn the golden rule in building wealth in your life which is to prioritize investments in your own self if you truly wish to achieve financial freedom in your life.  You need to continuously aim to gain new skills which you can utilize to make monetary gains.

There are a lot of specialized skills that you can choose from depending on your abilities and interests.  You can choose to become a neuro-surgeon, auto mechanic, dentist, plumber or fluent French speaker.  Practically every one of us has the potential of adding unique and distinctive skills into our occupational toolbox in order to get ahead in life.  We can no longer live inside the dream world where we can simply graduate from high school, look for employment, work until retirement age and enjoy your old age in abundance and peace.  That dream world no longer exists especially with the continuous globalization of our economy.  You can no longer escape reality.

After you have ensured that your primary or active career is right on track and you are making continuous investments in your own skills, you can then start acquiring and establishing your other sources of income, again choose something that matches your skills and interests.  Your choices could include buying an unused building to convert into storage units or starting a car wash or lawn mowing business.  If you like baking, you can start selling cookies and cakes.  You just have to make your interests and skills into money-making machines that can help you build wealth so that you will no longer have to worry about your finances.  It is also a great chance for you to earn more money by doing something that you are truly interested in.  When choosing additional sources of income, find those things that can make you feel excited and happy.

You may think earning an extra $100 each week may seem insignificant but if you look at it from a long term perspective, it can tally up to become almost $10 million in 40 to 50 years if you invest it in a Roth IRA that can earn the historical 11 percent interest rate that the S&P has provided its shareholders in the long run.  Imagine that by simply doing something that you truly enjoy and love and investing your earnings into assets that can earn you more profits, you can definitely enjoy a wealthy retirement.  You may ask, what will happen to that new house, the new car or the new clothes that you want to buy now?  Well, that is the reason why you should continue doing your primary or your active job and making investments in your personal skills.

Chapter 3: What is Passive Income?

Your aim should to achieve financial freedom at the easiest and fastest way.  You will only be able to do this if you can re-configure our whole life so that a significant percentage of your total income is not derived from your time and effort. Your objective is to have as many sources of passive income as you can so that majority of your earnings are derived from them.   The fundamental concept behind passive income is that your sources of income should automatically generate earnings with only slight or no effort at all after you have completed the preliminary preparations.  The most common examples of sources of passive income include the following:

- Rental from a real estate property

- Patent royalty or trademark license fee for an invention, characters or brands that you have created

- Royalty from your own creative creations such as a book, a song, and any other original work

- Income from a business that you do not personally manage

- Income from online ads in your own blog or website

- Dividend from stock ownerships and other holdings such as REIT and mutual funds

- Interest income from bonds, savings account or certificate of deposit

- Pension

Passive Income versus Active Income

It is ideal to have several sources of passive income because it will free your time up so that you can spend it on activities that truly matter to you.  When all your income comes from your employment or your profession and you want to earn the same level of income and have an unchanged lifestyle for the coming months or years, you need to carry on with the same amount of work hours at the same salary rate.  Even if you enjoy the career that you have, you should realize how much sacrifice you are making just by doing the daily tasks and activities involved in your career.  A worse situation is when you start wishing to retire early or you suddenly found yourself incapable of work due to health reasons, you will not be able to do so immediately because your source of income will vanish as soon as you stop working.  You will only be able to enjoy financial security if you continuously build your sources of passive income.

Kinds of Passive Income

There are two major categories of passive income: 1) passive income earned through sources that necessitate initial capital for startup and perhaps, additional capital for maintenance and growth and 2) passive income earned through sources that do not require any capital investments.  All through your journey towards financial freedom, you will have to decide which category to concentrate on depending on your existing financial status, your skills and abilities and even your personality type.

People who decide to concentrate on the 1st category normally have access to funds either from their own families or through other investors.  Or they may have the guts to loan large amounts of money from banks or other credit institutions to finance the purchase of assets for their business endeavor.  Perhaps, you have heard of people who apply and get approved for bank loans with significant amounts that they used to purchase or construct an apartment building which they eventually rented out to other people.  Even though this particular path may bring you high passive income in the long run while requiring a lesser amount of capital from your own pocket, you need to understand that it comes with its own risks.  When you use money borrowed from banks or other creditors, you need to be aware that your margin of safety will become a lot smaller since you will not be able to take in the same amount of setback prior to a default.  You run the risk of losing all your assets because your creditor, especially banks, can run after them when you are not able to pay your loan.

Other examples of passive income under the 1st category are as follows:

- When you acquire an ownership share in an operating business like those that manufacture goods in a factory or a furniture store that distributes several brands.

- Substantial investment in stocks and other holdings.  Imagine, if you have blue chip stocks that are valued around $10 million, it is quite reasonable to expect to earn annual dividends totaling to around $500,000.  When you are out traveling around the world or just lounging around inside your house, you could expect the arrival of your dividend checks in the mail.  But, obviously, you first have to have $10 million in order to expect that amount of income.

Don’t worry.  If you currently do not have extra funds to invest in building your passive income source, you can choose to focus on the 2nd category or the sources which don’t necessitate initial capital.  A lot of people have actually achieved financial success from zero financial capital.  You will have to rely on your own creativity as the primary capital.  You can write your own books or songs.  You can create patents or trademarks.  Or you can start your own blog or website and earn from online advertisements like Google Adsense.  You cannot really use your lack of money as an excuse not to start your journey towards financial freedom.

Taxes and Passive Income

Another significant benefit of earning your money through passive income sources is that those incomes frequently have more favorable tax rates compared to active income.  If you are currently employed, you might think that it is quite unfair to you.  But the principle behind these lower taxes is that the government is giving people a motivation to make investments in assets that can fundamentally contribute in the economy’s growth and in the generation of more jobs.

Chapter 4: Essential Elements of a Passive Income Portfolio

Here are the four essential elements that you should look for in a potential source of passive income:

Security of the source of the passive income

As we have mentioned earlier, passive income is automatically generated with little or no effort required from you after you have made the initial preparations.  You may spend several months to setup your source of passive income but you expect that after that initial work that you do, you can start to wait for the checks to arrive or your bank account to be directly debited with your earnings.  Before you spend your time, effort and money setting up your passive income source, make sure that it is safe and secure enough to automatically generate your income for years to come.  It would really be quite disappointing to expect a check in the mail and it does not arrive.

Potential growth in total passive income you can earn per year

You know that a particular investment is a truly great one when it turns out to be more valuable as the time goes by primarily because the fundamental business model of the company or the fundament value assets is of significant quality that consumers will take continuously take them even the prices also continuously increase.  One good example is an investment in the stocks of The Coca Cola Company.  If you were able to make your initial investments in the 1970’s and held onto those shares up until now, you would have received a number of dividends from the previous years.  But whether or not you chose to reinvest those dividends back into your stock portfolio or not, the dividends that you will receive on your original stock ownership will still be a lot greater compared to those that you received in the previous years because the company itself has grown and its profits have continuously increased and therefore, your shares of stock now warrants more dividends or more earnings.

Diversification of the main assets that enable you to earn the passive income

I am sure you have heard of the old adage “Don’t keep all your eggs in one basket”.  When it comes to your financial investments, you need heed that advice earnestly.  Of course, at the end of the day, you would want to know how much your complete investment portfolio earns for a specific period.  But with everything else being equal, it is a lot less riskier if you can earn an annual income of $50,000 from 20 various investments, which each investment giving you an average annual earnings of $2,500, that risking your funds in just two major investments with the hope that they can generate at least $25,000 each.  If you do not diversify your investments, you run the risk of losing a big portion of your capital when something goes wrong in those few investments.  And you definitely do not want to experience that catastrophe when you have worked for several years in building your investment portfolio only to end up losing a lot of money when you expected to start reaping the rewards of your hard work.

Tax consequence for a particular source of passive income

If you do not like thinking about taxes and tax rates and you just let your employers to compute your taxes and automatically deduct them from your paycheck, you need to change that.  If you truly want to become successful in your financial success, you need to realize that taxes are an important element that you need to start understanding.  It would be quite foolish to count your earnings without taking into consideration the taxes you will have to remit to the government, especially if you have set a target amount for yourself.  Not all the passive income that you earn will have an equivalent amount in dollars.  Currently, dividend income earned from your stock investments is taxed based on a 15 percent tax rate.  On the other hand, a dividend distribution from a master limited partnership may be considered just as a return of investment or capital and you would not have to pay as much tax during the first couple of years.  You can be liable for as high as 41 percent for a traditional corporate bond but you may not be taxed at all for municipal bonds that are tax-free.  But there are certain investment assets that have far more complicated taxation such as those that you hold in specific kinds of accounts like the Roth IRA wherein you are not actually liable to pay any taxes except when you unwittingly fall into traps such as the UBTI or the Unrelated Business Taxable Income Trigger.  When you account for your earnings, ensure that you take into consideration the actual amount that you will get after taxes have been deducted.

Perform Regular Review of Your Portfolio

You need to instill discipline in yourself if you truly want to achieve financial freedom.  It is not something that you can just wish for and simply wait for it to happen.  You need to regularly perform a review of your portfolio to see which investments are not working for you in terms of their security, growth, diversification and tax implications.  Based on your analysis, you need to create an action plan to increase your chances of success.  Remember, you are the CEO of your own life so you need to act as one.

Chapter 5: Define Your Goals

If you are just starting to build your portfolio of passive income sources, it is important that you go through the process of planning where you will have to identify the specific goals that you want to achieve.  What are your real motivations for wanting to earn passive income?  Do you want to ensure a comfortable life when you retire from work?  Do you wish to buy your dream house in five years without having to be burdened by debts?  Are you preparing for your children’s college education?  Do you dream of living a luxurious life with private jets and several houses with swimming pools?  You need to find your true motivations and goals so you can identify the correct approach that you should take when building your passive income portfolio.

Dennis Gilbert, a modern sociologist, defined being “rich” as living off on the earnings of your investments and not on earnings that are driven by your occupation.  When we use this definition, we can then say that a senior manager of a multi-national company who earns an annual income of $1 million is not really as well off as a person who earns the same amount from his various passive income sources such as stocks, mutual funds, real estate properties, and book royalties.  The difference between the senior manager and the investor is that the investor can choose to just stay at home and will still earn his income.  The senior manager, on the other hand, will stop receiving his salary when he is not able to go to the office to work.

Do you want to know one truth?  A lot of people do not really want to be wealthy.  This fact is supported by an important research study conducted by Daniel Kahneman and Angus Deaton who were both the Princeton University under the Center for Health and Well Being.  They were able to prove that money can really help you obtain happiness but only up to $75,000 each year.  This means that when you are able to earn an annual income of at least $75,000, your daily experience will not necessarily become enhanced when you start earning more than that.  But your “life satisfaction” will still continue to grow because you will feel more accomplished and fulfilled.  This is basically considered icing on the cake.  So, if you are just starting to get a hold of your finances, it is quite reasonable that you should concentrate on earning an annual income of $75,000 as your primary goal.  As you build your portfolio, here are some of the other goals that you may want to achieve:

- Live a zero-debt life.  If you are able to stay away from debts, you definitely cannot go bankrupt.

- Make sure that your portfolio is well diversified to minimize your risks and to lessen your worries at night.  Do your assignment in studying the investments that you will get into so that you can manage your risks.  You do not really want to end up staying awake at night worrying if you will lose your capital the following day or not.

- Ensure that you have sufficient insurance coverage to further lessen your worries about losing a lot of money when some of your investments go wrong.

Chapter 6: The Steps for Successful Transition

A lot of people have tried to generate income from multiple sources – both active income and passive income.  But only a few were able to become successful at it.  Many of them will start creating one source of passive income like blogs or information products but after several months or even years, they observe that the dollars don’t just come flowing in.  Yes, a lot of many have struggled and failed but it doesn’t mean that you will not be able to create a high income portfolio that will allow you to achieve your financial goals.  You really just need to learn the secret formula that has helped thousands of other people who have successfully brought financial freedom into their lives.

In this chapter, you will learn those secret formulas that will not only help you increase your income but also greatly lessen your working hours while building an extremely profitable portfolio.  You just need to make sure that you do not leave out any of the steps outlined below because you will only be able to achieve results when you strictly follow the seven steps. Perhaps, you have already completed some of the steps discussed below but completing the sequence will assist you in completely focusing and maximizing your results.

Each of the steps may not really be considered a secret formula when taken on its own.  But when you are able to combine all of them together, you will be able to create a very powerful portfolio that will give you steady flow of income.

Step 1: Create a Very Responsive Mailing List

When you try to build your portfolio of passive income sources without building a database that consists of your target prospects can be likened to teaching a monkey how to fly.  Well, I have to say it but it is really quite impossible.  If you ask anyone who has successfully built their passive income portfolio, they will inform you that their own mailing list is their portfolio’s lifeline.  Their mailing lists enable them to generate income practically on demand.  If you have been working on your portfolio for more than one year and your mailing list is still lesser than 1,000 people, it appears that you may be overlooking of the following primary factors in your portfolio:

Specific Niche Market

You definitely need to identify who exactly you want your businesses to appeal to and who you want to attract to your mailing list.  You may have determined the niche topic that you want to focus on such as effective communicate, increased productivity, healthy nutrition or stress management.  But that is never enough.  You have to be able to aim your specific message to a particular set of people who can easily resonate your message.  You need to understand that your target niche market is considered as the foundation of a truly strong portfolio of passive income, particularly if you are starting with a restricted budget and you want to earn income quickly.

A rewarding niche market is a set of people who have already made the decision that they do have a specific problem that they desire to find solutions for and they are eager to make an investment to find the best solution.  If you focus your marketing efforts to other people outside that niche market will basically require more effort and more time from you.  You may even end up with frustrations because you may feel like you cannot get your messages through the market.

The first group niche markets that you can most easily target are those who belong to particular professions or industries such as the physicians, hotel operators, wedding planners, restaurant owners, accountants and lawyers.  The second group of niche markets that you can focus on is the people who have identifiable goals or problems like those who want to train for their 1st marathon, get accepted in an Ivy League university, get a salary increase or find summer activities for their kids.

The most difficult niche markets to be successful at are those that involve general topics such as effective communication, increased productivity and healthy nutrition.  These are very broad areas of expertise wherein you will find it very hard to draw people to the products that you want to create.  If you are currently working on these topics or if you plan to work on them, you need to further dissect the topic so that you can find your niche market in a particular profession or industry or in particular goals or problems.

For instance, if your expertise is in nutrition, you can further trim down your market by targeting those who want to train for their first marathon.  Similarly, if your expertise is in effective communication, you can concentrate on helping lawyers in acquiring effective negotiation skills.

I am sure that this makes sense to you but a lot of people have an unintentional resistance to niche marketing.  Many of them tend to skip this step of identifying their real niche market and they end up spending five to ten years of their lives struggling in building their portfolio and in attracting passive into their lives to no avail.  They end up with nothing but frustration because of their unwillingness to truly look for their specific niche market.

After you have identified the specific niche market that you want to focus on, your next objective is to find out what is the main or principal problem of your target customers.  What are their biggest pains? What existing problems are they looking to solve?  What particular products and services are they already using?  Which particular sweet spot can you use to address their biggest needs while earning the most income?  Yes, there are a lot of people who earn big money from broad or general products that they have created.  But you need to realize that other people will only be willing to pay you with their hard earned money if you are able to solve their biggest problems.

Provide Tempting Giveaways

After you have determined your specific target market, the next step is to create something that you can give away for free which can definitely help you attract more prospect customers.  The most common giveaways that people give out are free newsletters, free e-courses and free white papers or special reports.  Those are all acceptable giveaways but what really matters is how you present your free giveaways on your website.

You cannot simply put a statement that says “Sign Up to Download a Free Special Report” or “Sign Up to Download Free Nutrition Guide”.  You need to think of a better statement that can certainly make your prospect customers to think that your offer is truly irresistible.  Make sure that your statement contains something very valuable, convincing and relevant.  Also ensure that your statement focuses on the greatest problems or goals of your target market.  For your prospect customers to be compelled to sign up and download your free giveaway, make sure that it contains the particular information that they will find useful in solving their problem.  It is also ideal if your free giveaway can have a value of around $20.

Focus on Building Your Mailing List

After you have created something that can you give away to your prospect customers for free in exchange for their names and email addresses, it is now time for you to begin attracting visitor traffic to your own website or blog.  You should take this task seriously and not just get into it when you feel like doing it.  You need to single-mindedly focus on creating your database of prospect customers.  The visitor traffic in your website or blog is the only way for you to build a credible list of prospects.  There are a lot of people who cannot seem to get into receiving enough passive income after ten years of trying because they have never grown their mailing list to more than five hundred.  One basic reason for that failure is because they were never serious enough in doing it.

There are a lot of techniques and strategies you can use to attract visitors to your website or blog.  But it is ideal to focus on two to three techniques that work best for you.  For example, you can focus on writing articles and submitting them to other professional blogs or websites.  You can also get into a joint venture with another business owner who is already reaching your target market.  A lot of people have become very successful after creating and distributing educational videos or giving out press releases.  Just make sure that what you will do is informative and educational for your prospect customers.  You can even re-purpose several of your existing materials so you can use them to draw in your specific target market to your website.  And regardless of the material you want to use – podcasts, press release, video or articles – you need to ensure that they all direct your target market to the free giveaway that they can download from your website.

Step 2: Productize Your Businesses

One of the key steps in growing your portfolio of passive income sources is “productizing” or transforming your expertise and knowledge into valuable content for your customers.  But I do not mean to say that you should productize your processes because that can really be an overwhelming experience.

Think about all the ideas and knowledge that you have built up on your subject matter expertise.  You can focus on those topics which a lot of people are not very familiar with or the areas where many people normally commit errors or mistakes.  Those are things that you can transform into content.  You can ask yourself questions such as:

- What are the things that you keep repeating to your clients or customers?

- Which particular steps do you often ask your clients to take?

- Are there any specific anecdotes, instances or accounts that you normally impart with your clients to make it easier for them to understand the point that you are trying to get across.

- Which particular principle, concept or belief do you believe your clients need to understand for them to become truly successful?

For instance, if you are an expert in Passive Income generation and you always ask your clients the question: “What is your niche market?”  You can create a product that can help people find out a profitable niche market for their business.  To start productizing your skills and expertise, deliberate on the various beliefs, ideas and convictions that you belief your clients need to understand before they can be successful in achieving their goals.  Focus on one idea in creating your first product.  Do not attempt to produce a lot of products all at the same time.  Three to four instructive products per year is more than enough for you to earn passive income.

Step 3: Diversify Your Line of Products

In the previous step, you learned that you can productize your knowledge and expertise.  But a lot of people still fail to succeed because they randomly generate their products without following any system or line of thinking so that all their products will perfect fit together.  You can just end up feeling perplexed and overwhelmed.  You need to understand that creating products is never enough.  When you diversify your line of products, it means that you offer your materials on the same topic in various formats including eBooks, tele-classes, live events, 12-week group programs, workbooks, membership sites or even private consultations.

We mentioned earlier that you should concentrate on creating only three to four products each year.  So your question now may be: which of these formats will you use to offer your products?  One technique you can use is to make sure that your products cover all styles of learning of different people including auditory, visual and kinesthetic.  Because of modern technology, a lot of people lean towards products that have an audio component.

You need to realize that not all people would like to read an eBook or watch a video because the most effective learning style for them is listening or auditory.  You also need to consider the lifestyle of your target market.  Do they have enough time to sit down to read an eBook or to watch a video?  Will it be better for them to listen to your product while driving or while taking their evening walks? You just need to understand the different people learn differently.  If all your products are presented in the same format, you will not be able to reach out to 10 to 30 percent of your target market.

Another diversification strategy is by price.  The people in your target market most probably have varying budgets and degrees of commitment.  For instance, one person may just want to try out the particular subject that you are selling and if you only offer a 12-week program that costs $400, that person will definitely buy your product even if he is interested in it.  Make sure that the products that you offer include low-priced ones with prices ranging from $20 to $100 so you can attract customers who are still exploring your subject.

In contrast, there will be some prospect customers who may want to get in deeper into your subject matter expertise and they are willing to make bigger investments into what they already consider as their passion or goal.  Make sure that you also have high-priced products for that specific type of customers.  Having high-priced items will also increase the perceived value of the products that you are offering.

When your products have varying formats and different price levels, you can definitely attract more customers.  Before you know it, your previous customers who bought your low-priced products may soon become one of your high-ticket customers.

Step 4: Build a Transformation Path for Your Clients

Another effective way to streamline your product line is to create a transformation path that your clients can pursue.  This will not only make it easier for you to decide what specific products to make but it can also definitely help reduce your marketing time by a significant amount.

An effective transformation path is basically a sequence of products, courses and services which are intended to assist your clients to improve their skills from a specific level to the next.  This can absolutely enhance your lifetime value for each of your clients.  For instance, if you are a consultant, you can make the following transformation path for your clients:

1. Clients who have just started their own businesses and who are currently setting up and building the foundations of their business.

2. Clients who are looking for ways to grow and expand their business.

3. Clients who already enjoy a fair amount of success but still wish to acquire more edge against their competitors.

When you start creating your products, make sure that they are designed to be of great relevance to various clients who are currently in various stages of growth.  Make sure that your clients can clearly see and understand the transformation path that you wish for them to take to become successful.  This is the best way for you to reach out to your entire prospect customers, regardless of the current stage they may be in because you will have a product that offers to solve their problems at different stages.

A lot of people are not aware of this very effective strategy so they end up generating number products and services that are quite random in nature.  They can have twenty or more products that they need to market separately.  Using a transformation path can accelerate and absolutely streamline your business, especially your marketing activities.  Instead of creating a marketing plan for each of your products, you can create a marketing plan that captures the entire transformation path.  And it is quite easy to accomplish because all you have to do is market your first product only.  That primary product will work on its own in marketing the rest of your product line.  One option you can take is to create a “toolkit book” which is concentrated on a particular topic.  You can then include all your pertinent subtopics inside that toolkit book.  Make sure that your book includes a lot of references to your other products and how your readers can gain access to those products.  After you have completed your toolkit book, your next step is to market it and then it will do the rest of your marketing work.

Here are some guide questions you can answer to develop the transformation path that you want to build for your clients:

- Do you normally work in phases with your clients?

- Can you visualize how you can setup your products so that they can be in a series of levels including beginner, intermediate and advanced?

- Can you instruct your clients about your concepts, ideas or principles as a series of different products?

As much as possible, do not create products that are considered stand-alone.  Each of the products that you will create should be able to fit into a group or line of products.  That will make it a lot easier for you to market your products and to earn big amounts of passive income.  Here is an example of a product line which follows a transformation path:

1. Preparatory eBook

2. Self-study program which your clients can study on their own using CDs, online courses or workbooks

3. Twelve Week Program where your clients can attend a course in a classroom setup.  You can then personally guide them in the implementation of the principles that you taught them in your other materials or products.

You need to realize that different people buy in varying methods.  There are people who prefer buying products that are informative while others prefer having one-on-one or personal interaction with the expert (which is you).  By providing them with options on how to learn your principles and ideas, you will be able to reach more clients or customers while earning more income.

Conclusion

Thank you again for downloading this book!

I hope this book was able to help you to learn the effective ways to start building your own portfolio of passive income sources.

The next step is to decide how you can implement the lessons you have just learned to start your own journey towards financial freedom.

Finally, if you enjoyed this book, please take the time to share your thoughts and post a review on Amazon.  It’d be greatly appreciated!

Thank you and good luck!

Table of Contents

Introduction

Chapter 1: You Can Start Now

Chapter 2: The Berkshire Hathaway Model

Chapter 3: What is Passive Income?

Chapter 4: Essential Elements of a Passive Income Portfolio

Chapter 5: Define Your Goals

Chapter 6: The Steps for Successful Transition

Conclusion