Achieving $100K net worth is a significant financial milestone that sets the stage for building long-term wealth. Today we are going over the wise words of the late Charlie Munger, my take on it today, and provide insights on how to make your money work for you.
Charlie Munger, the renowned investor and business partner of Warren Buffett, once said, “The first $100,000 is a b*tch, 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.” Munger emphasizes the initial struggle of accumulating the first $100K and how it becomes easier afterward. But he is right, it is just the first $100K, it is not going to be life changing once you reach $100K net worth. What you did to get to $100K should be what you do to get to $200K and $300K, the only difference is that it will be easier than the first $100K.
Personally, once I reached $100K net worth, I thought there should be something different I need to do next, but after some time I realized nothing changes. Unfortunately, $100K net worth is not a whole lot in the grand scheme of it all, but it is the first step in getting to an abundant financial position. My goal is to keep on pushing on and to build my portfolio the same way I have been and keep the same strategies in mind as I invest. I also think $100K is not the same as it was when Munger said it, what he says remains true but now it feels like that you can only ease off the gas once you reach $1M not $100K in today’s economy. So, after the first $100K, you need to keep the mentality of “always be buying [appreciating assets]” and “living below your means” as this will help you grow your portfolio to $1M for you to ease off the gas. The only reason you should change how you invest would be if your goals change, and an arbitrary dollar amount should not change your goals.
My take is, your next steps do not change after the first $100K, as you should still be trying to contribute to tax advantaged retirement accounts and saving for any large expenses you plan on having in the short term with CDs, treasury bills, or in a high yield savings account. It is so cliche to say but compound interest will be putting in work even more so with your first $100K under your belt. The time frame between $100K and $200K will be shorter as you will have more money deployed than before earning interest and appreciating as you continue to save the money you earn from working. Once you reach $200K you will recognize that the time to reach $300K will be even shorter. Check out the chart below from fourpillarfreedom.com to see a potential scenario of how long it can take someone who invests $10K annually at a 7% annual rate of return.
If you are still on your way to $100K don’t fret, check out this post on getting to $100K invested in 3 years to get the ball rolling faster. At the end of the day, money is a tool to live the life you want, you should seek to build wealth to live the life you want with it.