When it comes to building wealth, the first $100,000 is the hardest. That is, the first $100k takes the longest to earn compared to any subsequent $100k of additional net worth. Of course, we’re using some assumptions – like the fact that you won’t win the lottery or sell a property at a huge gain in a short period of time. We’re also assuming long-term average stock returns even though the stock market, in the short term, is much more volatile than that. Still, the point holds: when it comes to investment assets, it has to start with the first $100k – and that takes time. Then, as you accumulate wealth, future growth happens more and more quickly because you have more money invested so investment returns have a bigger and bigger impact. (7% of $10,000 is a lot less than 7% of $100,000.)

What The Numbers Say

This article is the best I’ve seen to describe and depict this principle. It’s written by Zach at Four Pillar Freedom and was featured on the blog Get Rich Slowly. (All quotes and visuals here are from Zach’s post, and I encourage you to go straight to his post to see all of his amazing and helpful visuals.) Here are some highlights:

  • If you invest $10,000 every year and earn a 7% annual return on your investments you’ll accumulate $1 million in about 30.7 years.
    • In this example, it will take 7.84 years to earn the first $100k and 1.35 years to earn the last $100k (to go from $900k to $1 million).
    • In fact, it will take you longer to go from $0 to $100,000 than it will to go from $600,000 to $1 million!



  • This is because saving money accounts for more growth than investment returns early on, but the more money you have invested, the more you benefit from investment returns.
    • “The time it takes you to go from $0 to $100,000 is mostly dependent on the gap between your income and your spending.”
  • Over time, however, your savings rate accounts for less and less of your growth compared to investment returns.
    • In this same example of saving $10k per year and earning 7%, it will take 11 years for your investment returns to contribute more to your wealth accumulation than your savings. Then, investment returns account for a bigger and bigger percentage of the increase to your net worth in each subsequent year.


Why You Shouldn’t Be Discouraged If You Don’t Have $100k Yet

  • Because the first $100k takes the longest to accumulate you might feel discouraged, but you shouldn’t!
  • As this same article points out, “If your goal is to save $1 million, then $100,000 only represents 10% of your total goal. But let’s instead view wealth accumulation from a time perspective: It takes 7.84 years to get your hands on that first $100,000 and a total of 30.7 years to go from $0 to $1 million. This means accumulating the first $100,000 takes up a whopping 26% (7.84 years / 30.7 years) of the total time it takes to accumulate $1 million.”

So, How Do You Get Your First $100k?

Because savings matters more than investment returns in the early years, saving is incredibly important. So, what should you do?

  • Spend less than you earn
  • Save “excess money” regularly
  • Automate saving and investing to make it easier
  • Ensure you receive “free money” if your employer offers a match into a 401(k) or similar account
  • Look for other ways to make money:
    • Sell items you no longer need or use
    • Work extra hours
    • Pick up a side hustle
    • Track down “missing money” such as old savings bonds you might be ready to cash in and invest
    • Utilize high-interest savings accounts to make more money
    • Don’t pay fees you don’t have to (bank fees, expensive investment funds, etc.)
  • Focus on what you can control
    • Tip: for investors years away from retirement, the large stock dips of late are good news — they mean you can buy stocks on sale!

Look At The Big Picture

I highly encourage you to read Zach’s entire article. It’s mostly visuals, and they are compelling. With this information in my mind, my hope is that you are more motivated to save and invest now. Your future self will thank you!

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