in today's video I need to explain to you why net worth explodes after 100K so let me show you the math first and then I'll show you what you need to do so let's start with this demonstration so what if I give you a choice I'll give you two offers and then you tell me which one that you would rather take offer number one I will give you a million dollars right now and offer number two I will give you a penny right now and every day for 30 days I will double your money so which offer would you take offer number one provides you with $1 million and here's what offer number two provides you with so on the first day you start off with a penny and on the second day you have two cents day three 4 cents day four day five 6 7 8 9 10 so your first 10 days are very boring and then it speeds up so take a look at day 11 day 12 13 14 15 16 17 18 19 20 and these last 10 days it gets very exciting on day 21 you're at $1,486 day 22 day 23 day 24 25 26 27 day 28 you're over a million dollar day 29 and day 30 if you chose option number two you would end up with over $5 million that is the power of compounding now please pay attention to this part because you will get it why your net worth explodes after 100K so look at how slow the progress was the first few days day one you one penny day two 2 cents day three 4 cents Etc after 10 days you have about $5 you know that's nothing but then the growth starts to meaningfully accelerate so look at the next 10 days starting off with day 11 and then it's really the next 10 days where the money just explodes higher I mean look at these amounts look at the growth rate it gets very wild now in this analogy getting your net worth to 100K is like getting to day 20 the first part of your journey is slow and boring and It's a Grind but then after that it starts to really Skyrocket that's because your money is making you money and because with a larger quantity of money you will make more money so this is why it's so easy for rich people to stay rich and this is why it's so important for you to get your net worth to 100K as quickly as possible so that demonstration showed you the power of compounding now I want to show you compounding in action when it comes to your net worth I will show you the math so that you can witness the numbers for yourself and you'll understand why this is so important and we'll use round numbers to make things easier so let's say you're able to save $10,000 each year to invest and let's say that you're able to get a rate of return of 10% a year so in your first year you save up $10,000 and you invest it on let's just say December 31st so you end the year with 10K in year two that 10K will make you $11,000 and you save an additional $10,000 for that year so you end the year with $21,000 so in year three you now have more money making you money and you save another 10K and you end the year with $33,135 6,410 year five 6 7 and so on now getting to your first 100,000 will take you8 years getting to your next $100,000 will take you four years your next $100,000 will take you 3 years so what's going on here again it speeds up the process of making more money becomes easier because your money is making you money and it's a vicious cycle in a good way so once you get here year 24 to 25 your net worth will increase by ,000 in one year once you get here year 25 to 26 your net worth will increase by $100,000 in less than one year so that's the power of compounding okay so what's the lesson here well I would say there are a lot of lessons here it's easier to make money when you have money rich people have an unfair Advantage compounding is the eighth wonder of the world so yes those are all correct answers however the lesson that is most important for you is that you need to get your net worth to $100,000 as quickly as possible so that your net worth can explode higher so the longer that you drag getting there then you are delaying your wealth explosion if you never get there then you will never experience this wealth explosion but what's the problem let's keep it real the problem is how are you supposed to get $100,000 so listen you're not going to magically come up with $100,000 in one year at least most people will not it's going to take you years but remember that getting your first 100K will be your hardest 100K and here's a truth that you must realize the majority of your first 100K will come from money that you work for and saved up so looking back to our previous example look at the math for your first 100K of net worth about 7 72,000 of that came from you working and saving that up now with that being said I must tell you this if your net worth is less than $100,000 that is why it's so important to save every dollar that you can because the quicker that you can get to 100K the sooner you will see your net worth start to skyrockets so you'll already know what you need to do you need to live within your means you need to spend less than you make so it's just a matter of you having the discipline to execute and you also already know this this is just a reminder that you will need to make sacrifices to save up your first 100K so will making sacrifices be fun and pleasurable so no of course not but it will be short-term pain for long-term gain so Charlie Munger who is Warren Buffett's right-hand man said and I quote the first 100K is a but you got to do it I don't care what you have to do find a way to get your hands on 100,000 and I must tell you this because so many people overlook this at the end of the day you're trying to spend less than you make right so that you have money left over to save and invest and most people overly focus on cutting back their spending so yes that's important but so many people neglect the income part of the equation you must also seek to increase your income because there are only so many expenses that you can cut especially these days with the cost of living being so outrageously High because of inflation so many people are only spending on Essentials and still there's nothing left over at the end of the day to save and invest so there's nothing left to cut is what I'm saying so don't neglect growing your income so I have a lot of videos and content on that topic and my last piece of advice that I want to share with you is to start investing early even if you have little money you have witnessed how the early stages of investing and growth are slow and boring right but that's just the way it is the sooner you get started the quicker you'll get through that boring phase and the sooner you'll get to that explosive growth so do it in a retirement accounts do it in a stock market account or brokerage accounts just get started the earlier the better so this is how people get rich trust the math trust the process now if you want my opinion on what I would do if I'm trying to get my net worth to 100K I'll give you my strategy this is what I would do so I would take a two-pronged approach so number one I would invest money in the stock market so I would look for every advantage that I could get so I would do so in a retirement accounts if your employer offers you a match on your 401k or 403 b or whatever plan take advantage take advantage of the tax benefits of taxfree growth as well and I like the Roth IRA very much so I've been very clear about that in my previous videos I would invest my money in index funds ETFs so mutual funds so I would keep it simple I would keep contributing money each paycheck and just set it and forget it and number two the other thing that I would do is save money for a down payment to buy a home home so this is under assumption that you found an area that you want to settle down in so basically you will use the leverage and inflation to your advantage so let me give you an example let's say that you can save $40,000 to place a down payment on a $400,000 home so listen I know that you're going to pay PMI if you can't put down 20% but not everyone has that luxury so if you can you know good for you now with $440,000 you have an asset that's worth 400k if home prices inflat by 10% then your home just went up in value by $440,000 from 400k to 440 now as you're saving money for a down payment I would put my money in a high yielding savings account so currently at the time of making this video it's easy to get a savings account that pays 4% to 5% interest and I would make sure that my money that I'm saving is in a reputable financial institution so stay away from unreputable Shady Banks like yat bank that decided to become an online casino so yes the one that Graham Stefan promoted so that's my advice let me know what you think so listen I want to end with this message I want to see you get wealthy I want to see you get financially free and no it's not going to be easy yes it's a very difficult process but I'm rooting for you thank you so much and wish you a very nice day take care