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Eric Siu explains why wealth compounds faster after you hit $100K. Save $10,000 a year at 7% returns: it takes 7.84 years to reach $100K, but each $100K after that comes much quicker. The first milestone is the hard part.
Eric Siu explains why wealth compounds faster after you hit $100K. Save $10,000 a year at 7% returns: it takes 7.84 years to reach $100K, but each $100K after that comes much quicker. The first milestone is the hard part.
Why does net worth explode after $100K? The principle is like it takes a long time to build up to $100,000, right? Let's say you save $10,000 a year and you're getting a 7% return in the market. It takes you 7.84 years of saving $10,000 a year, getting 7% return in the market to get to $100,000. But after that $100K, now your $100K is making you that 7% as well every single year. So it's compounding. It's like a snowball rolling down the hill. It's getting easier and easier. And by the time you're at the $900K level, it only takes you 1.35 years to get your next $100K. So it's like 481% faster from $900K to $1 million than it is from $0 to $100K. So what does that tell you? All the friction is at the very beginning of wealth building, right? So that's why all these people online are saying don't buy coffee, don't buy avocado toast like Graham. The reason is, is like they're trying to get you to your first $100K and that first $100K, every single dollar on your way to that first $100K is so important because it's going to speed up that entire compounding process.
