The First $100,000 is the Hardest

Billionaire investor Charlie Munger once said “The first $100,000 is a bitch, but you gotta do it. I don’t care what you have to do.. if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”

Unfortunately Mr. Munger won’t be sharing anymore of his wisdom with us as he passed away at the ripe old age of 99 recently. Berkshire Hathaway general meetings will be a whole lot different now that Warren Buffet no longer has his wise old partner sitting next to him chewing on See’s candy and dropping truth bombs left and right.

Charlie Munger was my favorite billionaire as he said it like it was. In a world of sickeningly fake niceties it’s always refreshing to hear a real adult talking. He was also a continual learner and read books voraciously. Rest in peace.

Why is the First Hundred Thousand So Hard?

Basically it’s because most of the first hundred thousand dollars will be coming out of your pocket. If you have $10,000 invested in the stock market and it increases by 10% then you have just $1,000 more. If you have $100,000 invested then that same 10% increase translates to an extra $10,000 for your portfolio.

So if you’re adding $1,000 per month or $12,000 per year to your investment portfolio then a 12% increase on a $100,000 would equal your contribution for the whole year! It’s like the magic money fairy contributes as much as you do to the portfolio.

It gets really exciting when dividends are adding more to the portfolio than you can from your income. If you’re adding $500 per month and your dividends are adding $500 per month then it’s like there’s two of you contributing to your freedom fund! Continually reinvesting all of your dividends every year will see your wealth compound very quickly with time, patience and persistence.

Capital gains, dividend income and your regular contributions to your investments, when combined, create a powerful wealth creator when your portfolio hits the $100,000 mark. Your portfolio growth becomes exponential rather than linear.

Each one hundred thousand dollar increase comes around faster and faster as the magic of compounding has more numbers to work with.

Everything snowballs and before you know it you’re sitting on a beautiful beach in Thailand wondering why you hadn’t started investing in stocks earlier! Better late than never I guess. This is why I have started this website, so that I can share the wonders of investing and how amazing it is to be a free human being with as many people as possible.

So, pull your finger out. Do whatever it takes (legally and without harming others!!) to get to your first $100,000 worth of investments.