Why The First $100,000 Is The Hardest (And Advice To Make It Easier)

Building significant, sustainable wealth is a goal that I think we all have. Or I wouldn’t be writing this article. And you wouldn’t be reading it.

But on our way to building that wealth, we have to overcome a challenge. The biggest challenge of all.

That challenge is accumulating the first $100,000.

Charlie Munger, Warren Buffett’s right-hand man and billionaire investor in his own right, has said that achieving the first $100,000 is the most difficult part of building wealth.

Of course, Munger isn’t alone. A lot of people have shared this insight over the years. And I concur 100%.

Why is this the biggest challenge, and how do we overcome it? That’s what I’m here to share.

Today, I want to give you three big reasons why achieving the first $100k is the hardest, and how you can overcome it all. Ready? Let’s dig in.

To give you some background on me, I was let go from my job in 2009. This was during the depths of the Great Recession. I had been working as a service advisor at a car dealership in the Metro Detroit area. You almost couldn’t have picked a worse industry, in a worse place, at a worse time. But I picked myself up and moved from Michigan to Florida for better job prospects, easier car-free living, a cheaper cost of living, and the absence of state income tax. After getting a new job down in Florida, I started investing in early 2010. I was 27 years old and about $30,000 in debt at the time.

From that point, it took me three full years to achieve my first $100,000, which I hit at 30 years old.

That required saving and investing with 100% focus and effort, all while making $40,000-$50,000 per year at my day job. I’m talking about living in a small apartment, eating ramen noodles every day, and waiting for the bus in the rain so that I could save over half of my net income and plow the savings into investments. I’m talking about getting five hours of sleep per night because I was up all night researching investments.

But my portfolio is now worth hundreds of thousands of dollars. And it gets easier and easier as time goes on.

In fact, my portfolio has increased by a six-figure amount since this past spring. What once took years now only takes months. And it happens with much, much less effort on my part. That said, achieving the first $100k is really, really difficult. And why is this so? Well, it’s quite simple. I’ll give you a huge reason why.

The first reason why achieving the first $100k is the hardest is because it requires you to take action and actually start investing.

The hardest step is always the first step. It doesn’t matter what you’re doing in life. Starting is the most difficult but also most important thing to do. After all, you can’t finish anything without starting it. I don’t care what we’re talking about. It could be anything in life, from exercising in order to improve fitness to expanding your skill set in order to gain access to better career opportunities. Whatever you could possibly think of, in order to accomplish any goal at all, you have to start. And the same goes for investing in order to build wealth.

I understand. $100k might look like an unclimbable mountain from the ground. But it is climbable.

However, in order to climb that mountain, you really do have to take that first step. No mountain gets climbed without taking that first, then second, then third step. So on and so forth. This requires belief. If you believe that you can accomplish something, that’s when it suddenly becomes possible. Henry Ford’s famous saying is particularly apt here: “Whether you think you can, or you think you can’t – you’re right”. Believing in myself wasn’t super easy. I grew up very poor, and I spent most of my first three decades on this planet completely broke. So believing that I could turn it all around was a tough sell, even to myself, but creating self-belief was instrumental to my ability and motivation to get started.

Once you actually commit to action and start investing, things do move along.

The key here is to start. And in order to start, you have to believe it’s possible. Believing something into existence is a potent experience that only builds on itself, with belief and success begetting more belief and success. It becomes a self-fulfilling prophecy. Warren Buffett once said: “Someone is sitting in the shade today because someone planted a tree a long time ago.” But you have to actually take it upon yourself to plant the tree and believe it’ll grow. Only then will you find yourself enjoying the shade down the road.

The second reason why achieving the first $100k is the hardest is because it requires a massive amount of change.

People don’t like change. They find the unfamiliar to be uncomfortable. But if you don’t embrace change, you’ll forever be stuck where you’re at. Look, if you keep doing what you’ve always done, you’ll keep getting what you’ve always gotten. I grew up on welfare in Detroit. My dad took off when I was eight years old. My mom gave me up for adoption when I was 11. I don’t have a college degree. Never had a high-paying job. Didn’t have a spouse to help me. I was broke  for the majority of my life. $100k wasn’t going to magically land in my lap. I knew that if I didn’t change my ways, I’d stay broke forever.

What do you want more? The comfort of the familiar or that first $100k?

You have to want that $100k. I mean, really want it. You have to want it so bad, that you’re willing to totally upend your life and change everything you’re familiar with. The familiar is comfortable. But this comfort is likely what’s holding you back. Becoming uncomfortable is where the real growth occurs. And that requires change.

Besides, change is the only constant in life. Don’t fight it. Embrace it.

This will require you to make massive changes in your life. Instead of spending 100% or more of your income, you’ll have to start saving and investing 50% – or more – of it. You’ll have to start fawning over stocks in the same way a lot of people fawn over material possessions. Researching stocks will replace researching consumer goods, and spending money on investing will replace spending money on consumer goods. To be honest, my mindset has been so radically altered that I now view the stock market as the best store in the world, and high-quality dividend growth stocks as the best merchandise in the world.

The third reason? Compounding doesn’t start to really kick in until that first $100k is achieved.

It’s the same as anything in life. The first few steps are always the hardest. Investing is no different. Albert Einstein has called compound interest the eighth wonder of the world. As powerful as compounding is, though, it takes a nice chunk of capital in order for compounding to show this power. I’ll show you what I mean. Compounding $5,000 by itself at a market average 10% annual rate takes… drum roll, please… 31 1/2 years  to turn into $100,000.

Achieving the first $100k requires you to do the heavy lifting.

Before the compounding can start to work its magic, you have to build the majority of that $100k through your own savings. The need to save is going to result in some uncomfortable questions about your lifestyle, like what you’re buying and how you’re prioritizing things. Compounding simply cannot help you very much when you’re working with an initial small sum of capital. So it’s going to be on you to attain a high savings rate and invest the savings as intelligently and often as possible.

After the first $100k is achieved, you can finally start to take it easy.

Bringing things full circle and coming back to Charlie Munger, he has noted that once you hit the first $100k, you can ease off the accelerator a bit. That’s because compounding can start to kick in and do its magic. Speaking of magic, let me show you some. Compounding $100,000 all by itself at a market average 10% per year for that aforementioned 31 1/2 years turns into more than $2 million .

If you really wanted to, it’s possible to start young, just get to $100k, live life on cruise control thereafter, and still become a millionaire. That’s how crucial that first $100k is.

As crucial as it is, it’s also difficult. Of course, nothing worth having in life is ever easy. If it were easy, it wouldn’t be worth much… and everyone would have it. Warren Buffett has likened his wealth to a snowball – a snowball he started rolling at the top of a very long hill many, many years ago. Because of compounding, this snowball has become enormous… mostly all by itself.

It’s your turn to build your own snowball.

In order to build your compounding snowball, you first have to accumulate the snow – or capital – and put in that extreme effort to pile it all up, form it into something, and then start to roll it down a hill. This is the first $100k. It’s not easy. It’s a huge challenge. But now you know how to overcome that challenge. And the good news is that the bigger this snowball gets and the faster it starts to roll, via compounding, the less effort you have to put into it. At a certain point, you don’t even have to push at all – it’ll become this monstrosity that grows ever-bigger and rolls ever-faster, all by itself, at a rate you could never accomplish by yourself.

— Jason Fieber

P.S. If you’d like access to my entire six-figure dividend growth stock portfolio, as well as stock trades I make with my own money, I’ve made all of that available exclusively through Patreon.