The Parable of The Pipeline
Burke Hedges says that becoming a millionaire is a matter of choice not a chance. Our pipelines are our lifelines. If we have one pipeline, we have got only one lifeline. The more pipelines we have got, the better. Pipelines are designed to give people personal and financial freedom and lifelong security.
PART-1 – BUCKET CARRYING WORLD
Burk shares a story of a village where two cousins used to live named Pablo and Bruno. They were very hard working and they needed was an opportunity. And one day they got it. Village hired them to carry water from a nearby river in the town square. It was like a dream for Bruno but Pablo was not so sure. Pablo wanted to build the pipeline from the river to the village. Bruno did not support Pablo in his idea and also whole village mocked Pablo but he was not very discouraged. While Bruno used to take rest in evenings, Pablo kept digging his pipeline. He kept reminding himself that tomorrow’s dreams are built on today’s sacrifices. Inch by inch is a cinch because short term pain equals long term gain.
Burk says that the problem with the bucket carrying is that the money stops when the bucket carrying stops. Which means the concept of ‘secure job’ or ‘dream job’ is an illusion. The most dangerous thing of bucket carrying is the income is temporary instead of ongoing.
Most people mistake bucket carrying for pipeline building. We observe that 99% of the people carry buckets. So we naturally assume that bucket carrying is the only way to get what we want in life. 99% population is living paycheck to paycheck not ongoing residual income.
PART 2 – YOUR PIPELINES ARE YOUR LIFELINES
Burk tells the story of a big time basketball player, Darryl Strawberry and a small town elementary school teacher called Margaret. One was paid millions a year and the other was never earned more than $10,000. One lived his life in spotlight and the other lived her life in a small town. Strawberry has made a fortune during his career-somewhere between $2 and $5 million a year and he earned $50 to $100 million before his 40th birthday. But strawberry has no income or savings to support his wife and children because he spent it all. He was suspended from basketball which means he has no income coming in but the bills were regularly coming in. On the other hand Margaret taught school for more than 50 years. When she retired in her 70s, she was making around $8500 a year. When she died at the age 100, she left almost $2 million to 10 different charities.
She built a long term investment pipeline by making regular monthly investments in quality stocks and allowing them to compound over time. She is a classic example of a long term pipeline builder. The key to financial freedom is to adopt a pipeline building mentality and then put your pipeline plan into action.
In case of leveraging time, one hour effort can result in 100 hours of production. One week’s work can result in one year’s production. In case of leveraging money, each dollar invested over time can compound until it grows to many times the initial investment.
MONEY LEVERAGE – HOW AVERAGE PEOPLE BECOME MILLIONAIRES
Vast majority of millionaires don’t inherit their fortunes. Statistics show that four out of five millionaire never inherited their fortune. Self made millionaire leveraged their money to build their palm beach pipeline. They put aside a big chunk in the “Investment jar” and let it compound year after year. Typically millionaires save 15% to 20% of their gross income and invest it visely in asset building pipelines such as stocks, bonds, closely held businesses, rental property, commercial real estate, pension funds etc.
The Doubling Concept– One of the ancient emperors of china fell in love with a new game called ‘Chess”. The emperor decided to reward the Game’s creator. He summoned the inventor to the royal palace and announced to the court that the inventor would be granted one wish. The inventor asked for one grain of rice. Just one grain for the first square of the chessboard and then doubling to two grainier for the second square. Four grains for the third square. And so on until the single grain has been doubled for the entire chessboard.
This story teaches us the power of the doubling concept or known as power of compounding. The famous mathematician Albert Einstein recognised the awesome power of duplication or compounding as the Eighth Wonder of The World.
The Rule Of 72: The Rule Of The Rich – to better understand how rich people get richer, lets take a look at “The Rule of 72”, a mind boggling wealth building concept that the world’s top investments brokers teach their rich clients. The rule of 72 is simple formula for calculating how many years it would take for an investment to double.
Time Leverage – The beauty of time leverage is that we have all been given the same amount of time. Which means time levels the playing field between rich people and average income earners. Time is available in equal amounts to everyone. Weather they are rich or poor..man or woman..black or white..college educated or high school dropout..young or old.. But this is not the same with money a some people are born with a silver spoon in their mouth. Some with a plastic spoon and some with nothing.
We all start our day with 1,440 minutes in our time account (24 hours a day with 60 minutes an hour). We all get the same time but the difference between people who live paycheck to paycheck and people who are financially free is how they use their daily allotment of 1,440 minutes.
PART 3- E-COMPOUNDING: THE ULTIMATE PIPELINE
Internet is the most powerful and productive pipeline in the new economy. Internet is the future and future is now. The advantage of Internet is that the pipeline of ongoing residual income can be created that we can build in two to five years, instead of 50 years. It is so powerful because it is millions of people over the globe each connected via a computer or cell phone..Able to instantly communicate with each other 24/7/365.
Conclusion – it is amazing to learn that it is easy to become a millionaire if you start building your long term pipeline early enough. The 5 year pipeline plan, can not only diversify your portfolio of pipelines but you can dream big dreams and start living them right away, instead of when you are in your 60s or 70s. You can have your cake and eat it too. We would rather be financial free on 5 years instead of 50 years. Internet is the ultimate pipeline because it is our business. We own it. We can work from home. There is no overhead, no boss, security, freedom, independent, No employees. No payroll. No inventory to speak of. It is lean. It is web based. And it offers a way to create ongoing residual income. At last Burk gives finest advice from his dad that is Live for Today, plan for tomorrow.