Why is the First $100,000 the Hardest? (Charlie Munger Explains)

The

first

100,000 are the

hardest

, this is especially true if you are coming out of school with little money to start and maybe have a decent amount of debt awarded, it is possible to get your bachelor's degree debt free, but I'll leave it to En another video, the only real assets you have are your skills education and maybe a job. Reaching a hundred thousand dollars in savings and investments seems daunting, but it can be achieved with some discipline, perseverance and consistency, so let's talk about why the

first

100 thousand dollars. is the

hardest

charlie

munger

is a billionaire he is a business partner of warren buffett at berkshire hathaway he is also a lawyer and investor but is probably best known for changing buffett's investment philosophy from one focused on fundamentally cheap stocks to one focused on high quality businesses which composed over time there are some good books about

charlie

munger

, including one called damn behind the scenes with berkshire hathaway billionaire charlie munger.

There is also a paragraph in the book that is very revealing. Munger has said that accumulating the first 100,000 from scratch with no startup capital is the hardest part of building wealth. Earning the first million was the next big obstacle to overcome. A person must consistently understand the income from him. Getting rich, he

explains

, is like rolling a snowball; It helps to start from the top of a long hill. early and try to get that snowball rolling for a long time, it helps to live a long life and of course there is another version of Munger's wisdom, the first 100,000 are a but you have to do it, I don't care what you have What to do if it means walking everywhere and not eating anything that wasn't bought with a coupon find a way to get 100,000 after that you can get gas relief a small dealer identified the three key points to generating wealth spend less than you earn , you invest and you capitalize, for some people the first 100,000 are the most difficult because they never figure out how to spend less than what they earn, you need to plan a budget and pay off debt, create an emergency fund and then invest, I would say which is not like that. difficult, you just need discipline, perseverance and consistency.

The important thing is that the amount you save at the beginning of your journey to financial independence is much more important than the return on your investment. Let's run some numbers using a handy investment calculator if you save a thousand dollars a year and assuming an eight percent return, that means it takes twenty-eight point six two years to accumulate that first hundred thousand dollars, but if you save five thousand dollars a year year with that same eight percent, it will take you 12.68 years and if you save ten thousand dollars. per year at that same rate, the time drops further to eight years, on the other hand, if it jumps back up to ten percent annually, it still takes seven point five five years to reach one hundred thousand dollars.

There is another point that arises from In this example, it is never too late to start. Starting early helps, but even if you start at age 40, you can reasonably reach your first 100,000 in about 8 years and be in a pretty good position by age 60 or 65. Next up is first. 100,000 is the hardest as some people never figure out how to invest, they just jump in and make too many mistakes. In my opinion, this is not a good plan as real money is at risk if you want to learn more about investing. in dividends, then I suggest taking a course or watching more videos.

The main problem with why the first 100,000 are the hardest is that people don't develop a workable plan that they can follow. The reason I like dividend growth investing is that it is simply and it has been proven to work, dividend growth investing also has some advantages as the costs are low, you are in charge and in control and you do not need to sell the investments. Lastly, the first 100,000 are the hardest for some people as they don't stay invested and take advantage of the power of compounding. They don't let their money work for them. This is an important aspect of wealth creation once you reach it. one hundred thousand dollars the power of compounding begins to be significant a dividend yield of three percent on one hundred thousand dollars is three thousand dollars when those three thousand dollars are reinvested they add to your total value and next year you will have three thousand ninety dollars in dividends and that doesn't include any new money you add if you take advantage of the power of compounding your money grows.

If you do it right, your second hundred thousand dollars should come faster than your first hundred thousand dollars. If you have a hundred thousand dollars to start with, there are other investment options and ultimately your savings and investment build up as the years go by and then to reach 1 million dollars, it just takes time to achieve your financial independence, but what are your thoughts? The first 100,000 are the hardest, comment your thoughts below and as always, take care of your money.