The Money Tree Formula by Robert G. Allen

I read Robert G Allen's book "Multiple Stream of Income" over the weekend and was intrigued by his Money Tree formula. His book was written in 2000 but still contains useful nuggets of information about how we can build our own financial security through building multiple streams of income. His Money Tree formula is a way to evaluate opportunities to see if they fit into his overall framework relating to building multiple streams of income.

Money Tree Formula
Here is the formula:

• M - Multiple Streams of Income -- the idea needs to be able to have expansion potential for additional streams of income
  
• O - Outstanding -- being more outstanding that your competitors
• N - Nothing down -- does not require huge capital requirement
• E - Employee resistant
  
• Y- Yield -- high yield cash flows
• T - Trend and Timing -- starting a business that goes WITH the trend
• R - Residual -- passive income, where the income flows even if you do not have to invest time into it e.g. dividends, interest, capital appreciation, royalties etc
• E - Essential to everybody everday - this will help generate repeat cash flows if people need to buy it again and again
  
• E - Enthusiasm -- you have to love what you do

The money tree concept struck my interest because it gives a common-sensical approach to evaluating what possible opportunities one should be looking out for. In his book, he shares ten streams of income ranging from stock market investments, options, real estate, infopreneuring etc. While some of the real estate examples were more US centric and some of the internet ideas were a bit behind time as the book was written in 2000, a large chunk of the ideas he presented were still useful.

What I learnt from the book
The book was helpful in reminding us that opportunities for building up multiple streams of income exist if we develop the type of receptive mindset to receive them and to act upon them. Singapore's open economy that ebbs and flows with the tidal forces generated from globalisation requires each of us to think hard about building our own multiple streams of income. Having a job and relying on our own financial security on our careers and central provident fund is an illusion as jobs move to the countries that can do the same work cheaper and faster. We either build up different avenues for us to have lunch or let our lunch be eaten by global competitors.

If you are in a comfortable job and feel that you just need to work hard and save, you should consider building up your own multiple streams of income for you can never know what tomorrow may bring.

Be well and prosper.