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Young Americans can get a one-way ticket to the millionaire club by tapping into the power of compounding.
It’s simple: you invest a small sum of money each month into a low-cost index fund. When you earn dividends, you automatically reinvest those proceeds to buy more shares and your returns grow over time.
But there’s a catch, according to personal finance YouTuber Mark Tilbury: the magic only really happens after you’ve earned your first $100,000.
“Don’t worry about earning millions,” he said. “Instead, focus on the first $100,000 because, after that, your net worth will go crazy.”
Tilbury joins a vast chorus of money mavens to drum home the significance of that first $100,000. Even the late Charlie Munger, a billionaire investor, described it as “a b—-, but you gotta do it” because “after that, you can ease off the gas a little bit.”
But hitting that $100,000 milestone is tough for young Americans today — especially when you consider post-pandemic inflation, elevated interest rates and sky-high home prices due to a nationwide inventory shortage.
Here’s why the first $100,000 is so important and how you can speed up your journey to personal wealth.
After you hit $100,000 “compound interest stops being lame,” according to Tilbury. “Getting that chunk of money as fast as possible is the key. […] Once you get to this point, it’s almost inevitable that you’ll be wealthy if you just invest in a low-cost index fund.”
To get there, Tilbury suggests people follow what he calls the GROWTH method:
G: Gain control of your finances.
R: Root your investments.
O: Optimize your tax management.
W: Weed out your debts.
T: Tap into additional income streams.
H: Heightened self-discipline.
Gaining control of your finances is crucial for achieving long-term financial stability and reaching your goals. And according to Tilbury there’s only one way to gain control of your finances— budgeting. Once you’ve assessed your budget, there may even be ways you can shave off some unnecessary dollars and avoid unnecessary spending.
Monarch Money’s expense tracking system makes managing your finances easier. The platform seamlessly connects all your accounts in one place, giving you a clear view of where you’re overspending.
By linking your credit card accounts, you can monitor your payment progress in real-time and set specific goals to get out of credit card debt faster.
When it comes to building your investment portfolio, Tilbury advocates for the ‘rooting your investment’ model, which prioritizes investing a set amount of money each month, whether that’s $50 or $500.
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Another way to root your finances is by diversifying outside of the stock market and gold can be a solid option, especially when it comes to saving for retirement.
AOne way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.
Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainties.
To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.
Once you get your money working for you, it is time to optimize your tax management by doing things like claiming all available tax credits and deductions, maximizing your tax-advantaged retirement accounts and tax-deferred savings accounts, or even starting a business and making the most of write-offs.
A qualified financial advisor can help you with all this and more. With Advisor.com, you can find the best advisor for your needs — both in terms of what they can offer your finances, and what they’ll charge to work for you.
Advisor.com is a free service that helps you find a financial advisor who can co-create a plan to reach your financial goals. By matching you with a curated list of the best options for you from their database of thousands, you get a pre-screened financial advisor you can trust.
To build a solid financial foundation and move closer to achieving high net worth, eliminating debt should be a top priority. For example, the current average annual percentage rate (APR) for a new credit card is a staggering 24.92%, according to LendingTree.
Carrying high-interest debt can severely hinder your ability to grow your wealth and secure your financial future.
By consolidating your debt with a personal loan through Credible, you can pay down your debts faster and at a better rate.
Credible is an online marketplace of vetted lenders that can provide you with debt consolidation loans to speed up your repayment and get closer to your first $100k.
To get started, just provide some basic information and Credible will present you with a list of loan options to help pay down your debt more efficiently and without juggling multiple bills.
The personal finance Youtuber suggests diversifying and growing your income by starting a side hustle. If you’d like to opt for a low-effort side hustle with the potential for high returns, real estate might be your answer.
Tilbury recently posted on X about how he used the earnings from one of his latest business deals. He said, “From that one deal, I earned enough to buy a rental unit, which has since generated a lot of passive income for me.”
If you want to generate investment income from the real estate market, there are plenty of opportunities to invest without having to find and purchase a property yourself outright.
For accredited investors, Homeshares gives access to the $36 trillion U.S. home equity market, which has historically been the exclusive playground of institutional investors.
With a minimum investment of $25,000, investors can gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning or managing property.
Backed by world-class investors like Jeff Bezos, Arrived makes it easy to fit these properties into your investment portfolio regardless of your income level. Their flexible investment amounts and simplified process allows accredited and non-accredited investors to take advantage of this inflation-hedging asset class without any extra work on your part.
With heightened self-discipline, reaching this financial milestone can set your networth on an upward trajectory. Tilbury stresses that you need to “find your inner discipline” to put all these steps into practice.
“Discipline is the currency of success,” Tilbury said. “The more you mint, the wealthier your future will become.”
The first step is saving – and saving your money requires discipline.
Certificates of deposits (CDs) can be an effective vehicle to exercise that discipline while effectively growing your savings. A certificate of deposit (CD) is a savings tool offered by banks and credit unions, designed to grow your wealth with minimal effort.
By locking in a fixed interest rate for a set period, you earn more than a standard savings account. With terms ranging from a few months to several years, CDs reward your financial discipline, though they do require you to keep your funds untouched until maturity to avoid early withdrawal penalties.
If you’re looking to start saving aggressively, it’s essential to have at least one high-interest savings account to help your stockpile grow.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
