Your net worth will 'go crazy' once you pass this money milestone, even the late Charlie Munger said you can 'ease off the gas' once you get there — here's the magic number and how to hit it
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Young Americans can get a one-way ticket to the millionaire club by tapping into the power of compounding.
It’s simple: you invest a small sum of money each month into a low-cost index fund. When you earn dividends, you automatically reinvest those proceeds to buy more shares and your returns grow over time.
But there’s a catch, according to personal finance YouTuber Mark Tilbury: the magic only really happens after you’ve earned your first $100,000.
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“Don't worry about earning millions,” he said. “Instead, focus on the first $100,000 because, after that, your net worth will go crazy.”
Tilbury joins a vast chorus of money mavens to drum home the significance of that first $100,000. Even the late Charlie Munger, a billionaire investor, described it as “a b—-, but you gotta do it” because “after that, you can ease off the gas a little bit.”
But hitting that $100,000 milestone is tough for young Americans today — especially when you consider post-pandemic inflation, elevated interest rates and sky-high home prices due to a nationwide inventory shortage.
Here’s why the first $100,000 is so important and how you can speed up your journey to personal wealth.
How do you make your first $100K?
After you hit $100,000 “compound interest stops being lame,” according to Tilbury. “Getting that chunk of money as fast as possible is the key. [...] Once you get to this point, it’s almost inevitable that you’ll be wealthy if you just invest in a low-cost index fund.”
To get there, Tilbury suggests people follow what he calls the GROWTH method:
G: Gain control of your finances.
R: Root your investments.
O: Optimize your tax management.
W: Weed out your debts.
T: Tap into additional income streams.
H: Heightened self-discipline.
Gain control of your finances
Gaining control of your finances is crucial for achieving long-term financial stability and reaching your goals. And according to Tilbury there’s only one way to gain control of your finances— budgeting. Once you’ve assessed your budget, there may even be ways you can shave off some unnecessary dollars and avoid unnecessary spending.
One tool that can help you budget and give you a complete overall view of your net worth is Empower. Simply link all your important financial accounts: your credit cards, mortgages, loans, and your investing, retirement and bank accounts – Empower network tracker does the rest.
Empower consolidates all your accounts in one place, making it easy to measure your progress over time. By seeing firsthand how your accounts look, you can pivot your budget to focus on your goals. Empower helps organize budgets for you, provides a personalized retirement plan and monitors your cash flow to ensure you're in full control of your financial situation.
Root your investments
When it comes to building your investment portfolio, Tilbury advocates for the 'rooting your investment' model, which prioritizes investing a set amount of money each month, whether that's $50 or $500.
One way to root your investments is through an automated portfolio like one offered by Acorns.
Spending money is inevitable, no matter how careful you are with your budget. But with tools like Acorns – an automated savings and investing app – you can root your investments as you spend.
Acorns helps you build your investment portfolio by rounding up each purchase on your credit or debit card to the nearest dollar. From there, Acorns automatically invest the spare change into a diversified portfolio of ETFs. This way, even your everyday spending becomes a part of your consistent investment strategy, helping you root your investments and grow your wealth over time.
If you sign up today, you can receive a $20 sign up bonus to help kickstart your investing journey.
Another way to root your finances is by diversifying outside of the stock market and gold can be a solid option, especially when it comes to saving for retirement.
A gold IRA is a type of individual retirement account that allows you to invest in physical gold and other precious metals.
With the help of Thor Metals, you can open a gold IRA that seamlessly integrates into your investment strategy. Similar to an automated savings platform, Thor Metals makes it easy to schedule regular contributions and manage your gold investments efficiently. This self-directed IRA offers the tax benefits of a traditional IRA while leveraging the inflation-hedging properties of gold.
If you want to learn more about whether this is the right investment for you, you can get a free information kit.
“Optimize your tax management”
Once you get your money working for you, it is time to optimize your tax management by doing things like claiming all available tax credits and deductions, maximizing your tax-advantaged retirement accounts and tax-deferred savings accounts, or even starting a business and making the most of write-offs.
A qualified financial advisor can help you with all this and more. If your goal is to increase your net worth, you can find an expert to help you make a plan with Zoe Financial. Simply answer a few questions about your financial situation and goals and they will match you with a range of qualified experts.
You can then reach out for a completely free consultation to ensure you find the right fit.
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Weed out your debts”
To build a solid financial foundation and move closer to achieving high net worth, eliminating debt should be a top priority. For example, the current average annual percentage rate (APR) for a new credit card is a staggering 24.92%, according to LendingTree.
Carrying high-interest debt can severely hinder your ability to grow your wealth and secure your financial future.
By consolidating your debt with a personal loan through Credible, you can pay down your debts faster and at a better rate.
Credible is an online marketplace of vetted lenders that can provide you with debt consolidation loans to speed up your repayment and get closer to your first $100k.
To get started, just provide some basic information and Credible will present you with a list of loan options to help pay down your debt more efficiently and without juggling multiple bills.
“Tap into additional income streams”
The personal finance Youtuber suggests diversifying and growing your income by starting a side hustle. If you’d like to opt for a low-effort side hustle with the potential for high returns, real estate might be your answer.
Tilbury recently posted on X about how he used the earnings from one of his latest business deals. He said, "From that one deal, I earned enough to buy a rental unit, which has since generated a lot of passive income for me."
If you want to generate investment income from the real estate market, there are plenty of opportunities to invest without having to find and purchase a property yourself outright.
For example, consider exploring available rental property deals through Arrived.
Backed by world-class investors like Jeff Bezos, Arrived is an investment platform and app that allows you to invest in shares of income-producing residential and vacation rentals.
When you create your account, you can browse available properties and learn about their share price, monthly rent amount, total target return, neighborhood information and more.
With a minimum investment requirement of just $100, you can start investing in rental properties and enjoy potential returns without the hassle of day-to-day property management.
While Arrived focuses on rental properties, there’s another crowdfunding platform that takes a different approach by allowing you to invest in owner-occupied residential properties.
Cityfunds lets you benefit from the hot housing markets in major U.S. cities including Miami, Los Angeles, and Nashville.
Cityfunds secures an interest in a home’s future value in exchange for cash. As homes’ values appreciate, so does the value of Cityfunds equity investment alongside the homeowner. So you can invest in portfolios of these owner-occupied properties, gaining access to the $20 trillion home equity market that spans multiple top U.S. metros.
With a community of over 10,000 users, CityFunds allows you to invest in a city you love for as little as $500 – without the hassle of dealing with high home prices, an expensive mortgage or the hassles of being a landlord.
Heightened self-discipline
With heightened self-discipline, reaching this financial milestone can set your networth on an upward trajectory. Tilbury stresses that you need to “find your inner discipline” to put all these steps into practice.
“Discipline is the currency of success,” Tilbury said. “The more you mint, the wealthier your future will become.”
The first step is saving – and saving your money requires discipline.
Certificates of deposits (CDs) can be an effective vehicle to exercise that discipline while effectively growing your savings. A certificate of deposit (CD) is a savings tool offered by banks and credit unions, designed to grow your wealth with minimal effort.
By locking in a fixed interest rate for a set period, you earn more than a standard savings account. With terms ranging from a few months to several years, CDs reward your financial discipline, though they do require you to keep your funds untouched until maturity to avoid early withdrawal penalties.
If you’re looking to start saving aggressively, it’s essential to have at least one high-interest savings account to help your stockpile grow.
Check out Moneywise’s list of the Best High-Yield Savings Account of 2024 to find the perfect account to maximize your savings and grow your money over time.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
