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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.”
How do you make your first $100K?
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.
“Gain control of your finances” and “Root your investments”
There’s only one way to gain control of your finances, according to Tilbury — budgeting. Once you’ve assessed your budget, there may even be ways you can shave off some unnecessary dollars and avoid unnecessary spending.
One way to get control of your spending is by finding ways to lower your insurance payments. According to Forbes Advisor, car insurance costs $2,150 a year, on average, but if you shop around for policies, you can save as much as $820.*
BestMoney can help you find the best auto insurance rates in your area with just a few clicks. *
Similarly, home insurance costs $1,678 per year on average, but you can potentially save hundreds with the help of SmartFinancial.*
SmartFinancial’s online marketplace spans a variety of insurance options and helps match you with the best home insurance rates near you.* As for rooting your investments, Tilbury is all for investing a fixed sum of money each month — say, $250 — into an index fund like the S&P 500 and then leaving your money to grow through the power of compounding.
Read more: Unlocking financial prosperity: Jeff Bezos shares the path to prime earnings through hassle-free real estate investment — don’t miss out on this opportunity to revolutionize your financial future
“Optimize your tax management”
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. If your goal is to increase your net worth, you can find an expert to help you make a plan with Advisor.com*. Simply answer a few questions about your financial situation and goals and Advisor.com will match you with a range of qualified experts.
You can then reach out for a completely free consultation to ensure you find the right fit.*
“Weed out your debts”
To secure your spot in the realm of high net worth, you have to pay down any debts you’re shackled to. 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.
“Tap into additional income streams” and “Heightened self-discipline”
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.
With Realtymogul, you can invest in real estate without the burden of being a landlord. RealtyMogul lets you explore institutional-quality real estate opportunities in residential, commercial and industrial sectors.
Finally, 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.”
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.