- April 26, 2024
- Posted by: legaleseblogger
- Category: Related News
Try Free Now: Legalese tool without registration
## The Road to Financial Success
Earning the first $100k can be a challenge, but it is often said that once you reach this milestone, your net worth can start growing exponentially. This growth can be attributed to careful financial planning and strategic investment decisions. By maximizing contributions to retirement accounts like a 401k and a Roth IRA, building up emergency funds, and consistently investing in funds like VOO, individuals can set themselves up for long-term financial stability and growth.
### How AI Legalese Decoder Can Help
The AI Legalese Decoder can offer valuable insights and guidance when it comes to understanding complex legal documents related to investments. By using this tool, you can ensure that your investments are in line with your long-term financial goals and that you are making informed decisions when it comes to expanding your investment portfolio.
### Planning for the Future
As you continue to grow your investments and build your wealth, it is important to consider the next steps in your financial journey. One option to explore could be diversifying your portfolio by investing in additional ETFs, which can help spread out risk and potentially increase returns over time. Planning for the next 5-10 years, it is crucial to have a clear investment strategy in place to ensure that you are on track to achieve your financial goals.
### Turning $100k into a Million
The concept of turning $100k into a million dollars may seem daunting, but with careful planning and smart investing, it is possible to achieve this milestone over time. By consistently investing in a diversified portfolio, staying informed about market trends, and seeking out opportunities for growth, individuals can work towards reaching this financial goal. The AI Legalese Decoder can help decipher the legal complexities involved in investing and ensure that your financial decisions are aligned with your long-term wealth-building objectives.
Try Free Now: Legalese tool without registration
AI Legalese Decoder: Simplifying Legal Jargon
Legal jargon can be overwhelming and confusing for many individuals, especially when trying to navigate complex contracts or documents. This is where AI Legalese Decoder comes in to help simplify and clarify legal terms and language. By utilizing artificial intelligence technology, AI Legalese Decoder can quickly analyze and break down intricate legal text, providing users with clear and easy-to-understand explanations.
Understanding legal documents is crucial in various situations, such as signing a new employment contract or entering into a business agreement. With AI Legalese Decoder, individuals can confidently review and comprehend the legal language before making any important decisions. This not only saves time but also reduces the risk of misinterpretation or misunderstanding of legal terms.
AI Legalese Decoder serves as a valuable tool for individuals seeking to enhance their legal literacy and make informed decisions. Whether you are a business owner, a consumer, or simply someone looking to better understand legal language, AI Legalese Decoder can help simplify complex legal jargon and provide you with the clarity you need. Say goodbye to the confusion of legal documents and let AI Legalese Decoder guide you through the complexities of the law.
****** just grabbed a
Here’s exactly what you need to do: Keep doing exactly what you’re doing.
You’re saving like $40k/year, starting with $100k, growing at 7% in the stock market gets you to $1MM in 13 years. Plug your exact numbers into a compound interest calculator.
The truth is it’s hard because when you first start growing that 100k you’re more than likely young and in debt making pennies and every cent counts. You have no idea what you’re doing and are always worried about losing it all.
By the time it hits 100k you’re more self aware and self sufficient. You probably make more money and likely starting a family or buying a house and now have a small nest egg and 2 incomes. Youve already bought more thing than you can enjoy in a lifetime so your frivolous spending is static or less than before.
Now is the easy part. You’ve just kept putting money away. Your house is increasing in value. Your 401k is growing and you keep contributing. Your Roth is growing. The 529s are growing. Compound returns have slowly turned that 100k into 1m+. And you didn’t even notice because you were to busy living life.
At some point the monthly/quarterly gains in your investments become larger than your contributions over the same period.
100k-1M was easier than 0-100k, though I didn’t perceive it speeding up much until over 500k. 1M-2M basically happened on autopilot while I was busy with work and life.
That’s just how compound growth works. That also means the first million is the hardest and the first 10 million.
There are 2 components to your growth:
1) your contributions
2) interest earned
As your account gets bigger, #2 becomes a bigger and exponentially increasing portion of your net worth.
That’s it. That’s the answer. Time to each successive $100k gets shorter than the last
It’s not significantly noticeable….until it is.
I’ve been grinding, grinding, saving, index investing, etc all the right things, and the balances slowly went up, or maybe even went down a little some years.
My funds were at $765k at the beginning of 2023. And then, bam, 31% gains in 2023 (I’m mixed more or less evenly between S&P500 Index funds and NASDAQ Index funds) and I was over $1M. Net worth appreciated 3x my income last year.
A friend of mine hit his first $1M at 49, after close to 30 years of consistent, aggressive investing. Last year, he went from $3.4M to $4.4M in net worth in one year – $1M increase as fast as the first 30 years of his investing.
You just gotta trust the process. Discipline, patience, consistency.
Easier than going from 0 to 100k for sure.
I think the usual comparison is usually “100K->200K is much easier than 0->100K,” indeed because of compound growth. If someone is saying getting from 100K to 1M was easier, it’s probably mostly because of their personal income growth, not compound investment growth. It takes a long time to 10x a principal from responsible investment alone.
100k is a good round number where your dollars start to snowball via compound growth in a tangible way. On an average return of the S&P you’re making close to 10k a year on the balance alone. You just got a 10k raise for doing nothing, and it will continue to grow year on year the more you continue to contribute. Eventually that compound growth will outpace your expenses and then you’ve hit FI.
To get to 100k in savings, you need to do quite a few things. Have the appropriate financial behaviors to actually save that much money. Have the appropriate salary to fund your accounts. And if you just keep doing what your doing, 1M is not an ‘if’, it’s a ‘when.’
10% growth on 10k is 1k
10% growth on 100k is 10k
10% growth on 1mil is 100k
You get bigger interest growth with higher numbers. It takes less time to reach higher numbers with compounding interest.
Power of compounding/exponential growth over time. Saving $1k/month w/ 10% annual returns is going to take about 6.5 years to get to $100k. To get to $200k it will take 4 years and continues to snowball from there which is why they say saving your first $100k is so hard. It will take 23.5 years to hit $1M of which $280k of your contributions and the rest is compounding/growth of your gains throughout those 23.5 years.
Our brains tend to think linearly. So when something is slow it remains slow when something is fast it remains fast. The thing is compound growth is exponential, meaning the growth then grows and the growth of the growth also grows. The fact is the rate of growth actually stays roughly the same during the period but because its exponential growth our linear thinking brains perceive it as speeding up. So there is this feeling that it takes forever to get to 100k but then $1M (which to our brains seems like so much more) seems to take relatively little time to achieve.
Thats just exponential growth for you. You don’t have to DO anything. Just keep investing.
As an example here is an image of my investments over time in terms of total dollars compared to my age I posted on a image hosting website.
[https://ibb.co/SNtBFkK](https://ibb.co/SNtBFkK)
I didn’t properly get started until age 30 and at that point I started regularly investing. Even though on a linear scale it looks like basically nothing happened until like age 37 really from age 30 to age 45 I pretty much made steady progress as you can see if its plotted on a log scale.
So starting at age 30 it took me 7 years to reach $100k. Starting at age 37 it took me close to the same time, 8 years, to reach $1M. If I manage to keep up this pace then in another 8 or so years I’d have $10M.
Our linear thinking basically views that 7 years to get to $100k as being a long time but yet it only took about the same time to get to $1M and that seems fast. Honestly its the same rate the entire time.
> I keep hearing how earning the first 100k is hard but after you save your first $100k your networth goes up exponentially. HOW?
I have no idea who is saying that but that’s not my experience. I saved my first 100K in my 401Ks over close to 2 decades. It hasn’t gone up exponentially from there at all though my savings rate has certainly increased due to the appreciation of the original $100K I saved.
I think it’s right to say that after you save $100K it’s much easier to get to $200K. Then from $200K I’m guessing it’s easier to get to $400K. Then from $400K to $800K and so on. In other words it’s easier to double your money once you have saved some because of the fact that the money you saved is now working for you also.
Time. It takes time. You’re on a good track. Stick to it, learn more, and keep going.
Don’t be like me and Husband: Saved–like you–but didn’t learn how to manage it, so we didn’t maximize our returns as well as we might have. Hit retirement age and had good savings but disorganized and need professional assistance. Learn what you need to know over the next few years and use professional assistance to *tweak* things, not *guide* things.
It’s not easy to turn 100k into a million. If you keep contributing and stay invested you might do it in 12-15 years.
Perhaps you’re conflating “easy” with “quick”.
It is easy in the sense that you do not have to change a single thing after you hit $100K in order to hit $1M.
You’re contributing $23,000 into the 401k, $7,000 into the Roth IRA, and $12,000 into your taxable brokerage account. So each year that’s $42,000. If we ignore any annual increases and assume an 8% growth rate, then starting from $0 you’ll hit $100K in 2.18 years and $1M in 13.32 years. If you didn’t invest and only saved cash, it would take 2.38 years for $100K and 23.8 for $1M.
Time value money dude. You’re doing all the right things
I’ve also never heard anyone say it’s “easy”, it just takes a long time, but compound interest reaps rewards.
I’d argue that 100k – 1M is rough but 1M – 2M is lightning by comparison. Some of this def has to do with market conditions, but without a significant change in pay it took under half the time to go 1M to 2M that it did to go 100k to 1M.
My dad always said it’s the first million that’s hard.
It’s not. Just keep doing what you’re doing and you’ll be more than fine at retirement.
I started tracking my progress towards our retirement goals, which was $3,000,000 at that time. I have pretty pie charts and pretty bar charts for my spouse, but I prefer numbers so I also have a long spreadsheet of numbers in columns.
It took us 17 years for our net worth to go from $100,000 to $1,000,000. It took us 7 years for our net worth to go from $1,000,000 to $2,000,000.
During that time we kept buying new cars and raising a family, not cheap.
$2,000,000 to $3,000,000 took another 7 years, that one was tough because we were 100% paying for our children’s college and grad school. That was a massive outflow of cash. Multiple kids in college in the same year, costs a LOT of money. If we would have had that cash we would have gone from $2,000,000 to $4,000,000 in seven years.
During those years we had the crashes of 2002, 2008, and 2022.
Right now, our net worth is doubling every seven years.
100K, 1M, 10M, 100M, 1B – all the same shit – ITS NOT EASY>
Buy something for 100K > sell for 1M = done
I always assume 7% RoR. Rule of 72 says 72/7%=10years for money to double. $1,000,000/$100,000 = 10= 2^3.3(ish). 3.3*10= 33 years at 7% interest assuming you add no more funds.
The real tipping point occurs earlier though. Max 401k contribution is $22,000/year. $22,000/7%=$314,000. At this principal level the market gains should become as much as or more than your contributions.
The average return on the S&P500 is 10% / year. If you put 100K into an S&P500 index fund, in 24 years and 2 months the 100K might be expected to become 1M. If you consider that the average inflation rate has been 3.8% per year and want to correct for that, then in 38 years and 3 months you would have 3.84 million dollars which would be an inflation-adjusted 10-fold increase in value.
It can’t get much easier than investing in an index fund and letting it ride.
In your case, however, you are continuing to add money are regular intervals, and may be getting contribution matches from your employer, which obviously increases the rate at which you are accumulating wealth. If you received no employer match and contributed $23,500 per year, with an initial deposit of 100K, you’d reach 1 million in about 13.5 years.
Starting with $100k, investing it for 7% adjusted growth per year, and adding 40k every year starting after the first year is complete, you get:
$1M at year 13
$2M at year 20
$3M at year 25
$4M at year 29
$5M at year 32
$6M at year 34
$7M at year 36
$8M at year 38
$9M at year 39
$10M at year 40
These numbers are generally adjusted for inflation with the 7% assumption. You can naturally do better if you adjust the $40k annual investment up each year as well.
It is the easiest thing in the world. You don’t have to lift a finger to turn 100k into 1M. All you need to do is to invest it in the market and wait for 35 years. The hard part is to do it sooner than that.
It was more so around 500k, when it felt like it started building itself. 100-400/500 was still kind of a struggle from what I remember.
[removed]
Because 7% of 100k is 7k and 7% of 10k is 700 bucks.
I can get similar rates of returns but it grows “faster” in terms of dollars.
Its called time bud. Patience is a virtue.
The growth of your portfolio happens slowly at first and most of the growth is you just putting your own money in. Once you get to 100k and the market goes up by 15% one year all the sudden you made 15K without doing anything actively. If the market does it the next year you make $17250. Of course the market doesn’t go up 15% each year but if you keep putting your own money in over time your 100k will turn into 1 million.
Any retirement calculator can give you this info.
[deleted]
Don’t think it goes up exponentially! Do you know what that actually means?
A big piece of why 0-100k is harder than 100k-1million is that when people are <100k they don’t have the financial habits like maxing out 401k, maxing out RothIRA, and having an emergency fund. You are well on your way to 1m
Stock market + time. And don’t touch it. Easy in theory