Learn how to multiply your money with the multiplying effect.

Multiplying Effect for More Money

“How much money do you want to make every year? If you haven’t seriously asked yourself that, you should.” ~Steven Key in “Want to Make More Money? Understand the Multiplying Effect” in Entrepreneur.com

Think about how much money you will make this year. 

Next think about how much you would like to make.

Finally, multiply your desired amount by 30.

Strategies to multiply your money for more money later.

Here’s how it works. Lenny wants to make $100,000  per year. Multiplied by 30, that’s $3 million. And that’s the gross amount he’d make over 30 years working. It would be wonderful if the entire $3 million could be saved or invested for the future, so retirement would be a breeze. Although in aggregate $3 million sounds like a lot of money. Yet, that $3 million doesn’t take into account all the money you need to spend in order to live; taxes, housing, food, raising kids, vacation, college etc.

All of a sudden, making $100,000 per year doesn’t look so great to Lenny.

The Multiplying Effect-How to Multiply Your Earnings

What is a multiplying effect? What if you could do an activity once or create a product one time and get paid multiple times. The multiplying effect is putting your efforts and resources into something that will pay off over and over. The term scalable is also used to describe this concept.

When I was 25, I attended a retirement planning workshop in a local community center. I was in the company of 40 to 60-year-olds. My concern for my future led me to begin investing, open my first IRA and look for additional sources of income. Although I had no idea what the multiplying effect was, I’ve been integrating this practice for decades. Most recently, in 2010, I began a financial education website, Barbara Friedberg Personal Finance.com. In 2015, Robo-Advisor Pros.com was born, a fintech education site. These recent forays into a practical application of the multiplying effect, have yielded financial rewards beyond my initial expectations. 

Use a wealth-building mindset to explore activities that can integrate the multiplying effect into your life.

Here are examples of Multiplying Effect activities:

Write a book and receive ongoing royalties.

Invest in a stock, bond, or mutual fund and receive dividends.

Create a course and sell it over and over again.

Buy real estate (or a REIT) and receive ongoing rental payments.

Invest in real estate or financial assets (stocks and bonds) and sell them for a greater amount than you paid, due to appreciation.

Buy a franchise or two and hire others to manage the properties.

Sell affiliate products.

Create and sell an app.

Create and sell digital downloadables; products, games, videos, templates.

Create a subscription service and sell to many; meal planning, make-up boxes, monthly wines, shaving packages.

How many other multiplying effect activities can you think of?

Can You Hold a Salary Job and Use the Multiplying Effect?

If you’re thinking that you don’t have time to create another business while working your 9 to 5, you may already be participating in the multiplying effect. If you’re investing in your workplace retirement account, then you’re taking part of your salary and investing it to grow and compound for the future.

With a $100,000 annual salary, if you invest $10,000 per year in a target date mutual fund paying an average 7% return, after 30 years, those annual $10,000 investments will be worth $1,010,730.

Viola! The multiplying effect in practice. 

Investing in a retirement account during your working years is one of the best ways to multiply your earnings and take care of the future.

If you’re more ambitious, try one of the previous strategies in your spare time to further multiply your efforts.

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