The first €100,000 is a bitch, but I’ve gotta do it!

The first 100K is a bitch but I have gotta do it piggy - text

These are the words of famous investor and Berkshire Hathaway’s second-in-command, Charlie Munger. But why is jumping over this €100,000 hurdle so important? How does this help me reach financial freedom earlier? Let’s find out.

Why is the first €100,000 so important and why is it so hard?

The exact quote of Charlie Munger is as follows:

“The first $100,000 is a bitch, 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”

To clarify the reason why you need to reach €100,000 as soon as possible, I will give you an example with simple mathematics.

The stock market has averaged about 10% per year. 10% of €10,000 is €1,000. 10% of €100,000 is €10,000. It’s as simple as that. The sooner you reach €100,000, the easier it is for stock market returns to move the needle of your wealth.

Let’s say your take home salary is €2,000 a month. With a portfolio of €10,000 generating 10% per year, after 1 year you’ve earned a two weeks’ salary by investing in the stock market.

In the same situation if you have a portfolio of €100,000 generating the same 10%, after 1 year you’ve earned 5 months’ worth of salaries (€10,000/€2,000) by investing in the stock market.

Once you have achieved a €100,000 portfolio, at 10% it takes only about 7 years to double your money. With a salary of €2,000 it would take the same 7 years and saving 60% of your salary to have saved the same additional €100,000. Over time, it’s just impossible to keep up with investment returns by working a day job and saving!

However, reaching €100,000 is difficult. That’s because you start with nothing. You need to earn most of that €100,000 by working and saving aggressively. Building wealth starts with being frugal and investing your savings.

If you do this consistently, building a million dollar portfolio becomes far more reachable!

What are the practical implications for myself?

Selling off my investment portfolio and putting it all in my mortgage savings account made me start all over again. My investment portfolio is only about €4,500. So I saved and invested only 5% of my goal. Ouch!

But I stick to my goal and I just keep moving forward! I learned to apply the steps in the following paragraph to speed up the process to reach €100,000.

How can you speed up the process to reach €100,000?

• Set clear yearly and monthly goals. If you fail to plan you are planning to fail!

• Increase your savings rate as much as possible. Remember, most of that first €100,000 is achieved by saving!

• Look for side-hustles. See what you can do to add new sources of income.

• Sell stuff you don’t need. Many things are just collecting dust while you can definitely use the money!

• Do not compare yourself, your house, your car to those of others. Don’t be tempted to follow the herd and spend money on useless stuff. Stick to your goals!

To my readers, have you already reached €100,000 in your investment portfolio? How quickly did you reach it? Any tips you can share to help me and others?
Related articles:

5 steps to take before you start investing!

Stocks are much more awesome than stuff (and debt)!

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2 thoughts on “The first €100,000 is a bitch, but I’ve gotta do it!”

  1. This is a very relatable blog, I’m also striving for the first €100.000 in my investments, I’m not there yet but hope to reach it in about 4 years. Diligent and consistent saving should get us there, no further tips 🙂

    1. Thanks and thanks for your comment!

      Great work! I’ll probably need a little bit longer than 4 years as I need another €95,000 :). But 6-8 years should be doable. Saving, saving, saving. That’s all it takes but it’s hard to do it consistently!

      Good luck!

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