Why Net Worth Goes CRAZY After $100k!

This is the best advice I've heard on how to build a high net

worth

. It came from a millionaire I admired as a child and it stuck with me ever since I worried about not having enough money to pay. The things I had always dreamed of in his exact words to me were: Don't worry about making millions, instead focus on the first 100,000 because after that your net

worth

will go

crazy

. I didn't fully understand it at the time, but He did what he said and lo and behold, it worked, so why is the first 100K the hardest?

Well, there are two main reasons for this. The first is your purchasing power. Think of this as your level in a video game you just haven't played. long enough to develop your skills and therefore you cannot compete with more experienced players. This is exactly the same when it comes to making money when you are younger. This problem is actually getting worse. A recent study found that Generation Z has approximately 86% less purchasing power than my generation, the Boomers, at the same age. This is partly because older people stay in the workforce longer, meaning higher-paying jobs are harder to get, but it's not all doom and gloom like the Internet. offers a great way for younger people to make a lot more money than the older generation as most of them don't understand how to use Instagram let alone create a side business online when it comes to technology there aren't as many Boomers who can keep.

Well, guys, I'm not like me. The second reason your first 100K is the hardest is your lack of compound interest. Think of your money as a snowball. They roll it down the hill by investing money and as it rolls it picks up more snow which is your compound interest, the bigger your snowball gets the more snow it accumulates and therefore the more compound interest you generate, It sounds amazing, yes and no, let me explain to you right now, if you don't have at least 100,000, then your snowball is not big enough. To earn significant income, you essentially cannot benefit from compound interest.

I mean, let's say you invest 10,000 in an S&P 500 index fund and get an average annual return of 7%, which historically has been the amount investors can expect afterward. In 5 years your money will have grown from $10,000 to $4,175, that is, five full years to earn $4,175. That's why it's so difficult to reach the first 100,000. It's all about how much you can contribute to your investment fund rather than how much compound interest you're earning. This means you will have to make more money any way you can, honestly it was no different for me. I remember doing at least three different side hustles at the same time to earn enough money by working that many hours and also resisting the urge to spend it on vacations and the latest designer clothes is really deadly, but trust me, it's worth it, as a Once you hit the first 100,000, it's much easier to grow your money, so why does net worth go

crazy

after 100,000?

The answer is compound. interest stops being boring and actually starts sounding pretty awesome. Take a look at this graph. If you invest 10,000 a year with an average annual return of 7%, going from no to 100,000 will take you 7.84 years; However, going from 100,000 to 200,000 will only take 5.1 years. So overall it will take 2.74 years less to do the second 100K compared to the first which is 35% faster to do the second 100 Grand than the first and it gets even better if we scale things up to pass from 200k to 300K, it only takes 3.78 years. then, from 300,000 to 400,000 takes 3 years and from 400,000 to half a million is only 2.5 years.

We could go on, but I think you get the idea, just look at how the graph starts to go crazy, but it all happens after the first 100,000 get that part. Earning as quickly as possible is the key, just think that if you can save just a couple of years of the time it takes to reach that 100,000 mark, how much faster will you become a millionaire once you get to this point, it's almost inevitable that I'll be rich if I just invest in a low-cost index fund if all I wanted to do was save this 100,000 and invest it in an S&P 500 index fund and never invest again, let's say I don't know, you completely forgot about the account .

You would still become a millionaire in 33 years. That's how powerful compound interest is once you've earned that first 100,000. So how can you make your first 100,000? Well, all you need to do is follow the growth method. I actually came up with this myself and it helped me in those early days of wealth creation, so I hope it can help you too. The G stands for gaining control of your finances. There is one way and only one way to gain control and that is to make a budget. Yes, I said it now, don't get it twisted. Budgeting isn't a rule book designed to stop you from having fun, it's rather a guide that guides you toward more informed decisions.

I'm not saying you have to be super frugal with your money, but you do need to understand the difference between your needs. and your desires, the r stands for root of your investments, let's say you invest $250 a month in an S&P 500 index fund and get an average annual return of 7% over 40 years, you will have 656 thousand, but what is even more impressive is that 536 thousand of this. It's compound interest, in other words you just have to invest 120k yourself. I know what you're probably thinking, that's all well and good, but by then I'll be over 60 and I'll be eating dinner.

I completely understand it. That is why if you can invest this first 100K as soon as possible, you will do much better than in this example. Now that you are making some money, you should focus on what it means to optimize your tax management. It may seem sophisticated, but it's actually as simple as this: avoid paying taxes. Now let me make something very clear: tax evasion is completely fine and something that smart people do, tax evasion, on the other hand, is illegal and not what I'm talking about, but check if so. To earn more, you would have to pay more taxes.

I agree with you and the rich pay most of the taxes but there should also be an incentive for someone to become an entrepreneur as it provides employment to the rest of society and fortunately there are entrepreneurs. They are taxed on the profits they make at the end of each year, which means they can deduct expenses from their profits. This is called amortization. This is different from an employee as they are taxed on their monthly salary. So let's say. You are really passionate about the latest. Tech like the new iPhone, you could start a YouTube channel reviewing gadgets, and once it's making new money, you could deduct the cost of your tech items from your earnings and get them tax-free.

Basically, the government has helped you pay for the item you want however you want. You can only do this within reason, your business or side hustle must need this item, in other words it must be a justifiable expense, this is why starting your business around your passion can be a great way to save a lot of taxes. This is what I did with my radio control model stores and my son also does it with his video production company. If this seems interesting to you, we will be talking about this even more in my 2k challenge that I am running on Discord, I will let you know. a link in the description if you want to save your place, it's completely free and there are even chances to win fantastic prizes, so next we have W to eliminate debt.

Did you know that the average American has $21,800 in debt? So if you are in debt, then you are not alone, list all your debts as soon as possible and prioritize them based on their interest rates, so that all the debts you have with the highest interest rates are the ones you should tackle first. This is the dark side of compound interest if you don't understand it then it can start to work against you. Think of it as the hot sun hitting the snow you're trying to collect to earn your first

100k

. If you have too much debt, you melt it.

You will never get to the stage where your money works for you, so my advice for this case is to make small snowflake payments whenever possible, because every little bit helps you not give up, because neglecting your debt will cause you many problems. stress in the future, so even if you feel like you're losing money on payments, think of it as an investment for your first 100,000 T means taking advantage of additional income streams. Yes, I'm talking about starting a side hustle starting in 2023. 50% of Americans have a side job, even if they make over

100k

a year, a side job gives you multiple advantages by diversifying your income, you'll have more money to put into it. into your tax-advantaged account, so there will be more investments and, again, you'll just be adding more. snowball your snowball by allowing compound interest to run its course if you want to know how to build your wealth from $0, then I'll leave that video up there, but don't click on it just yet.

Make sure you subscribe if you want to increase your wealth, okay I will do it. see you there