“The Parable Of The Pipeline” by Burke Hedges, an International bestseller author, speaker, and Entrepreneur. His books have been translated into many languages around the globe. This book teaches the importance of building a pipeline for ongoing residual income. With residual income, we work once and get paid repeatedly. This is why the pipeline keeps pumping daily, year after year, whether you are there to do the work.
According to Burke Hedges, the achievement of millionaire status is determined by a deliberate decision, not luck. He also emphasizes that our number of pipelines is directly related to our success, as they serve as our sources of financial and personal independence and stability throughout our lives.
Having only one pipeline means having only one source of support. Hence the more pipelines we have, the better our chances of achieving our goals. In his book “The Parable of the Pipeline,” Hedges explains how pipelines are specifically created to provide individuals with long-term security and freedom.
Bucket carrying world
In the book “The Parable of the Pipeline,” Burke Hedges recounts the story of two diligent cousins, Pablo and Bruno, who were eagerly searching for an opportunity to succeed.
Finally, they were hired by the village to transport water from a nearby river to the town square. While this opportunity delighted Bruno, Pablo had a different vision. He believed they should construct a pipeline from the river to the village instead.
Unfortunately, Bruno did not share Pablo’s enthusiasm, and the villagers even ridiculed him for his unconventional idea. However, Pablo refused to be discouraged and persisted in pursuing his vision.
Burke Hedges tells the story of Pablo and Bruno, two hardworking cousins who were given an opportunity to carry water from a nearby river to the village square.
While Bruno was content with this arrangement, Pablo had a bigger dream – to build a pipeline that would transport water to the village. Despite facing ridicule from the villagers and lack of support from Bruno, Pablo continued to work hard on his pipeline, reminding himself that short-term pain would lead to long-term gain.
Eventually, Pablo’s pipeline was completed, and he became the Miracle Maker, creating pipelines worldwide by teaching others his method. However, he soon realized that only a small percentage of people were willing to dream big and take risks in the “bucket carrying” world, where income is temporary and not ongoing.
As Hedges explains, the problem with this model is that it offers no security or protection in case of unexpected events like layoffs or illness.
To avoid such uncertainties, Hedges urges readers to consider building pipelines – a concept of ongoing residual income that can provide lifelong financial stability.
Unlike bucket carrying, pipelines offer income potential even when you’re not actively working. Sadly, most people live paycheck to paycheck and fail to realize the benefits of pipeline building. The bucket-carrying model involves working hard to earn bigger buckets, dreaming of retirement, and carrying buckets until that day arrives.
Hedges emphasizes the importance of taking risks, pursuing your dreams, and creating pipelines for ongoing residual income, rather than relying on temporary bucket-carrying jobs that offer little security or long-term stability.
Many people mistakenly believe that carrying bigger buckets will lead to a better financial future. They compare themselves to other bucket carriers and dream of lifting bigger buckets to make more money.
However, even high-paying jobs like doctors and lawyers often result in living paycheck to paycheck due to their expensive lifestyles.
The truth is that true wealth is not about how much you earn but how you manage it. Wealth comes from hard work, planning, self-discipline, and perseverance. Carrying bigger buckets alone will not make you wealthy.
In contrast, pipelines are self-sustaining sources of income that provide ongoing financial security. However, building a pipeline takes effort and dedication. The key is to focus on creating pipelines rather than just carrying bigger buckets.
Your Pipelines are your Lifelines
The Parable of the Pipeline, as told by Burk, compares the financial success of a big-time basketball player, Darryl Strawberry, and a small-town elementary school teacher named Margaret.
Despite earning millions of dollars a year, Strawberry has no income or savings left to support his family because he spent it all.
On the other hand, Margaret, who earned only $8,500 a year as a teacher, built a long-term investment pipeline and left almost $2 million to charities when she died at 100.
As shown by Margaret’s example, the key to financial freedom is to adopt a pipeline-building mentality and implement a pipeline plan.
Building pipelines make regular investments in quality stocks, allowing them to compound over time. In contrast, relying on big buckets, like Strawberry did, is not sustainable because buckets do not automatically replenish themselves.
Leverage, which comes from an old French word meaning “to make lighter,” is the power to achieve more with less effort. There are two types of leverage: time and money.
Leveraging time means that one hour of effort can result in 100 hours of production while leveraging money means that each dollar invested over time can compound to many times the initial investment.
An example of leveraging time is hiring employees to perform specific tasks in a business. For instance, in a restaurant, hiring staff allows the owner to focus on managing the business and generating revenue. The owner can profit from the difference after expenses by paying $100 in wages to a 10-person staff that generates an average revenue of $1,000 per hour.
Money Leverage – how average people become millionaires
It is a widely known fact that a vast majority of millionaires do not inherit their fortunes. Statistics indicate that four out of five millionaires have accumulated their wealth through hard work and astute financial planning.
Self-made millionaires have leveraged their money to build their financial pipelines, which enable them to multiply their wealth over time. They are known to set aside a substantial portion of their income, typically 15% to 20%, into an “Investment jar” that is wisely invested in asset-building pipelines such as stocks, bonds, closely held businesses, rental property, commercial real estate, pension funds, and other similar avenues.
Investing in the stock market is a classic example of leveraging money to grow wealth. One of the most prominent investors in the world, Warren Buffet, is a living legend of Wall Street and is ranked as the second or third richest man globally.
Buffet built his fortune old-fashioned by leveraging other people’s money and making himself and his investors rich. This strategy is known as “The Parable of the Pipeline.”
As rich people do, the key to leveraging money effectively is to “pay yourself first” by making regular monthly contributions into investment accounts and then letting the money compound over time.
The best way to fund investment pipelines is to set aside a portion of your income every month and deposit it into your pipelines.
The Doubling Concept is a powerful illustration of the power of compounding. The story goes that an ancient emperor of China fell in love with a new game called ‘Chess.’ The emperor decided to reward the game’s inventor and offered him one wish.
The inventor asked for one grain of rice for the first square of the chessboard, then doubled to two grains for the second square, four grains for the third square, and so on, doubling the number of grains for every square on the 64 square chessboard.
Initially, the emperor thought it was a simple wish, but as the inventor started putting the rice grains on the board, doubling the number of grains, the emperor realized his mistake.
By the end of the second row, the grains owed to the inventor totalled 32,768, and there were still 48 squares remaining. A grain of rice doubled for every square on the 64 square chessboards would calculate 18 million trillion rice grains.
This story teaches us the power of the doubling concept or the power of compounding, which the famous mathematician Albert Einstein recognized as the Eighth Wonder of The World.
The magic of compounding is why heirs of famous families such as Kennedy, DuPont, Firestone, Ford, Rockefeller, and Getty can continue to live a life of luxury without their fortunes drying up.
Their buckets never run dry because their pipelines keep pumping yearly for decades, creating an infinite source of wealth, as depicted in “The Parable of the Pipeline.”
The Rule of 72 is a mind-boggling wealth-building concept that the world’s top investment brokers teach their wealthy clients. It is a simple formula for calculating how many years it would take for an investment to double. Known as “The Rule of the Rich,” it is a powerful tool for understanding how rich people get richer.
Doubling Concept or Rule of 72 –
- Determine the annual interest rate on your investment.
- Divide the interest rate into 72.
- The result is the number of years it takes for your investment to double.
Becoming a millionaire is not restricted to a select few in the present era. As long as one has the dedication to invest a fixed percentage of their income and let it grow over time, anyone can become a part of the millionaire community.
However, not everyone has the persistence to dedicate four to five decades towards building their retirement pipeline. Fortunately, there is a five-year pipeline plan that does not require a substantial amount of capital. In this plan, instead of utilizing your finances, you make use of your time as leverage.
There are two ways to reach the top of an oak tree. One can either sit on the tree and as it grows, they will grow higher, or they can climb and reach the top.
Similarly, when people build pipelines using their money over decades, they choose to sit on an acorn and wait. This is known as the 50-year Pipeline Plan.
However, the 5-year pipeline plan is like climbing oak trees, where one can accomplish the same goal of achieving financial independence and security, but it only takes 10% of the time.
The power of time leverage lies in the fact that everyone has been given the same amount of time. It levels the playing field between the rich and average-income earners, as time is available equally to everyone regardless of background, gender, education, or age.
However, this is not the case with money, as some people are born into wealthy families, some with modest means, and some with nothing.
Each day we are given the same amount of time, 1440 minutes. However, the key difference between those who are financially free and those who work for a paycheck every month is how they choose to utilize these precious minutes.
Understanding that the perfect time to start building a pipeline or pursuing any other goal will never come is crucial.
There will always be obstacles, emergencies, and stressful situations that we must navigate. These challenges are a part of life, and we must learn to work around them.
Rather than waiting for the perfect time, we should focus on making the most of our time.
We can achieve great things if we use our evenings and weekends to work on meaningful projects like pipeline-building. For instance, if we commit to setting aside just two hours each workday and three additional hours on Saturday and Sunday, we could add 16 hours of productive time to our weekly schedule. Over the course of 50 weeks, this adds up to 800 extra hours a year.
Successful people in every field understand the value of time and seek opportunities to leverage their time for greater productivity and success.
However, some people may question why they should take the time and effort to build pipelines when things are going well for them at present. The answer is that there is no better time to build a pipeline than when things are going great.
This is because when unforeseen circumstances, such as illness or layoffs, occur, their paychecks will stop. Without a pipeline, they may struggle to maintain their financial security.
We all have the same amount of time each day, and how we use it can make all the difference in our financial success.
Rather than waiting for the perfect time, we should strive to make the most of our time, even if it means sacrificing a few hours each day and on weekends to work towards our goals. By doing so, we can leverage our time and increase our chances of achieving financial independence and security.
The inevitable truth is that what goes up must come down. When people experience a downturn, they may be confronted with harsh realities such as job loss, career changes, medical emergencies, credit card debt, or the responsibility of caring for elderly parents.
It is wise to be prepared for such situations before they happen, instead of trying to react to them afterwards.
Smart individuals understand this and take the opportunity to invest in their future during good times. Therefore, now is the ideal time to focus on building our pipelines, not during economic downturns.
Investing our time and money today to build pipelines will cost us less compared to struggling with meagre income during our retirement years.
While it is true that we may have varying amounts of money available to leverage, we all have the same amount of time.
Building a pipeline is no longer reserved for the wealthy; anyone with a drive and willingness to invest time can create a pipeline that will generate income for years or even decades.
Thanks to the internet, we have access to the most potent tool for time leveraging in history, which has helped to create numerous millionaires in record time. This tool, known as the E-Pipeline, presents endless opportunities for those willing to put in the effort.
E-compounding: the ultimate pipeline
The Internet is widely considered the most potent and productive pipeline in the new economy. It offers an opportunity to create a residual income pipeline that can be built in several years rather than decades.
This powerful tool connects millions of people across the globe, enabling them to communicate with each other instantly, 24/7/365, via their computers or cell phones.
While e-commerce sites have succeeded in offering consumers the lowest prices, they often fail to build long-term relationships with their customers. This lack of loyalty means internet users are not incentivised to make weekly or monthly purchases. To create loyal customers, e-commerce sites must focus on building relationships.
Personal relationships are the secret to building customer loyalty in the Internet age. Word-of-mouth recommendations have always been the most effective form of advertising, and people often shop and buy based on these recommendations.
By leveraging our time and relationships, we can create loyal customers for relationship-driven e-commerce sites while creating a pipeline of ongoing residual income.
E-commerce companies provide the technical infrastructure, including websites, online ordering, shipping, payment processing, and accounting. By paying referral fees, these companies can attract loyal customers who return to their sites repeatedly.
This mutually beneficial arrangement allows companies to solve their biggest problem, the lack of loyal customers, while helping individuals build a pipeline of ongoing residual income.
E-compounding, the combination of compounding and e-commerce, has the potential for exponential growth. By leveraging time and relationships through the internet, individuals can create a pipeline that generates profits and grows over time.
This pipeline allows people to enjoy the benefits of their efforts in months rather than waiting for years.
The beauty of e-compounding is that it doesn’t require a lot of money to get started and requires no special skills.
It is a tool for everyone, regardless of their financial situation or goals. E-compounding offers a new and improved way for e-commerce to fulfil its potential, with referral-based internet companies flourishing while deep discount e-tailers struggle with debt.
E-compounding is the ultimate pipeline for every purpose and purse, from earning extra money to becoming a millionaire many times over.
It offers an opportunity to escape a dead-end job, afford festivals, or build pipelines that circle the globe. E-compounding is a tool for leveraging time and relationships to create a pipeline of ongoing residual income, making it the ultimate pipeline for everyone.
The prospect of attaining millionaire status is an alluring notion, and it seems that achieving such a feat may be more feasible than previously thought.
By building long-term pipelines over five years, individuals can create a diverse portfolio that allows them to realize their most ambitious aspirations and enjoy the fruits of their labour much earlier in life rather than waiting until their golden years.
The appeal of the five-year pipeline plan lies in its ability to provide financial freedom within a relatively short time. The internet represents the ultimate pipeline, as it allows us to own and operate our own businesses from the comfort of our own homes without the constraints of traditional overhead costs, bosses, or employees.
This lean, web-based approach provides us with the security, freedom, and independence to cultivate ongoing residual income without the burdensome responsibilities of managing inventory or payroll.
In the wise words of Burk’s father, it is important to live in the present while also planning for the future. By adopting a forward-thinking mindset and investing in the power of pipelines, we can position ourselves for a brighter, more prosperous tomorrow while also enjoying the benefits of financial stability and security in the present moment.
The Parable of the Pipeline Book Review
Hedges provides practical advice on how to create passive income streams, such as investing in real estate, starting a business, or writing a book. He also emphasizes the importance of taking action and not just dreaming about financial success.
Overall, The Parable of the Pipeline is a quick and easy read that offers valuable insights into the importance of creating passive income streams. While some of the advice may seem simplistic, it is a good reminder that financial success is achievable with the right mindset and actions. I highly recommend this book to anyone looking to improve their financial situation and gain a new perspective on building wealth.