Munger said the first $100K is ‘the hard part’: Why Ramit Sethi agrees that this milestone is the key to building wealth

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The late Charlie Munger — billionaire investor, Berkshire Hathaway vice-chairman and Warren Buffett's right-hand man — once told shareholders that accumulating the first $100,000 in capital was a difficult yet essential part of long-term financial success.
“The hard part of the process for most people is the first $100,000,” Munger said at a 1999 meeting of Berkshire Hathaway investors (1). “If you have a standing start at zero, getting together $100,000 is a long struggle for most people.”
But what makes $100,000 so special? Does it have some kind of money-growing magic?
The first $100,000 is considered a milestone in building wealth because it’s the tipping point at which the incredible power of compound interest begins to take effect.
Personal finance guru Ramit Sethi agrees with Munger. In late 2024, Sethi uploaded a video to his YouTube channel illustrating why entering the six-figure club fast-tracks your path to financial freedom (2).
Here’s a closer look at why it’s so important to get to that coveted six-figure savings mark — as well as a few tips for getting there.
To show the power of six-figure savings, Sethi used the example of a saver who started with $0 and invested $833 a month for 40 years at a 7% rate of return.
It would take this hypothetical person roughly eight years to get to their first $100,000. From there, however, it would take just 32 years to hit $1 million.
That’s just four times longer to make nine times more.
More importantly, your journey will eventually hit a tipping point where you earn more on previous contributions and accumulated capital than on new contributions.
“This is where interest starts to explode. You’re actually making more from your existing money than from the money you personally put into it as the interest gets to this tipping point,” Sethi explained.
“When you reach a million dollars, about 70% of your wealth will come from interest alone.”
And that’s the power of six-figure savings — and beyond. But how exactly can you get there? Below, we’ll offer some additional tips on how to snowball your savings.
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When thinking about ways of getting to that mythical $100K milestone, it’s perhaps a good idea to start with the man who kicked things off, Charlie Munger.
“I would argue that the people who get there relatively quickly are helped if they’re passionate about being rational, very eager and opportunistic, and steadily underspend their income grossly,” he said at the same meeting in 1999 (1).
“I think those three factors are very helpful.”
Elsewhere, Sethi has also offered his own advice on ways you can reach this important milestone, including automating your savings, putting raises toward savings instead of spending and keeping your expenses within a budget you can reasonably afford (3).
This is great advice, but it focuses primarily on saving habits. If you want to grow those savings, that’s where investing comes in.
Smart investments can make your hard-earned savings grow even faster.
For example, since 1957, the S&P 500 has delivered about 10% compounded annual return — and it has delivered 11.5% for the past 40 years, according to Fidelity (4).
Assuming you invest $833 every month, that means it would take you just slightly more than seven (rather than eight) years to reach that $100,000 milestone.
Even a year can make a huge difference in your savings journey.
Making a habit out of putting money aside every month is now easier than you might think.
While allocating a portion of your monthly paycheck is a good place to start, you can also take it one step further and begin investing spare change from everyday purchases with Acorns.
Here’s how it works: Once you link your bank account or credit card with Acorns, the app automatically rounds off your purchases to the nearest dollar and deposits the excess into a diversified portfolio of ETFs managed by experts at leading investment firms like Vanguard and BlackRock.
For instance, if you buy a donut for $3.25, Acorns will round up the purchase to $4 and invest the change in a smart investment portfolio. So a $3.25 purchase automatically becomes a 75-cent investment in your future.
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Not all investors have to buy ETFs and index funds, however. Many financial gurus like Sethi prefer to be more hands-on with their stock picks, and they enjoy staying on top of market performance.
If you’re an enthusiastic DIY investor, you’ll need the right kind of tools to help you make your trades easily.
That’s where Moby comes in. Moby offers expert research and recommendations to help you identify strong, long-term investments backed by advice from former hedge fund analysts.
In four years, and across almost 400 stock picks, their recommendations have beaten the S&P 500 by almost 12% on average. They also offer a 30-day money-back guarantee.
Moby’s team spends hundreds of hours sifting through financial news and data to provide you with stock and crypto reports delivered straight to you. Their research keeps you up-to-the-minute on market shifts and can help you reduce the guesswork behind choosing stocks and ETFs.
Plus, their reports are easy to understand for beginners, so you can become a smarter investor in just five minutes.
Once you’re armed with the right knowledge, you also need a powerful platform to execute your trades.
Platforms like Robinhood are designed to make investing simpler and more approachable.
If you prefer a more hands-on approach, you can also buy and sell individual stocks, fractional shares and options (for qualified traders) — backed by 24/7 support. Stocks, ETFs and their options trades are commission-free.
With access to popular ETFs like the Vanguard S&P 500, you can build diversified exposure without needing to pick individual stocks.
The platform also offers both a traditional IRA and a Roth IRA, so you can choose the tax strategy that fits your retirement plan.
With its recurring investment feature, you can set up automatic investments of your preferred fractional shares, stocks and ETFs on your own schedule.
Over time, this helps make investing a habit and steadily grows your portfolio.
Earn up to 3% on eligible account transfers to a taxable Robinhood account through March 25th. Risks and terms apply. Robinhood Gold ($5/mo) subscription may apply.
While making smart investments is one way of getting there, another way is targeting higher contributions.
For example, a side hustle, freelance work or extra hours at your current job could help you contribute perhaps $900, or even $1,000, every month instead of $833.
Alternatively, instead of getting a second job, you could also start trying to build new sources of passive income. This way, you can join the highly coveted six-figure club without compromising a healthy work-life balance.
Real estate can be a lucrative investment avenue for generating passive income.
According to a 2025 survey by Gallup, Inc., 37% of respondents believed real estate to be the best investment option, beating out other traditional hedge bets, like gold (5).
However, amid the soaring housing prices across the U.S. over the past few years, investing in rental properties to build a stream of passive income might be unfeasible for many. Not to mention having to worry about property maintenance and finding reliable tenants.
If you don’t have excess funds to buy a second home — or simply don’t want to deal with the hassles of becoming a landlord — now you can start a turnkey real estate side hustle with the help of real estate crowdfunding platforms.
Rental properties have long been a proven source of steady, passive income for high-net-worth investors. However, the time, effort and costs involved in managing and maintaining multiple properties prevent many from investing.
So, unless you’re a hedge fund titan or an oil baron, you’ve likely been shut out of one of the most profitable corners of the market.
That’s where mogul comes in. This real estate investment platform offers fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation and tax benefits — without the need for a hefty down payment or late-night tenant calls.
Founded by former Goldman Sachs real estate investors, the mogul team handpicks the top 1% of single-family rental homes nationwide for you. Simply put, you can invest in institutional quality offerings for a fraction of the usual cost.
Each property undergoes a vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10% to 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.
Every investment is secured by real assets, not dependent on the platform’s viability. Each property is held in a standalone Propco LLC, so investors own the property — not the platform. Blockchain-based fractionalization adds a layer of safety, ensuring a permanent, verifiable record of each stake.
Getting started is a quick and easy process. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.
You can also tap into this market by investing in shares of vacation homes or rental properties through Arrived.
Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.
To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100, potentially earning quarterly dividends.
Once you’re an investor with Arrived, you’ll also gain access to their newly launched secondary market, where investors can buy and sell shares of individual rental and vacation rental properties directly on the platform.
This allows you to buy into properties you may have missed at the initial offering or sell shares before a property reaches the end of its hold period.
With access to more than 400 properties in 60 cities, this new way to trade real estate opens up flexibility and opportunities to gain access to more properties every quarter.
Finally, another strategy for fast-tracking your entry into the six-figure club is utilizing your employer’s 401(k) match program.
According to research from the Investment Company Institute, 94% of large plan participants had their companies match a 401(k) contribution in 2023 (6).
But there’s usually a cap on the amount an employer will match your contributions to your retirement account. Or maybe your employer doesn’t have a 401(k) matching program.
In fact, a 2025 report from Pew Research Center says 56 million workers — nearly half of America’s workforce — don’t get retirement benefits like a 401(k) through their jobs (7).
Not having employer-sponsored retirement plans shouldn’t stop you from opening tax-advantaged retirement accounts like self-directed IRAs. These accounts can give you control over your savings, allowing you to choose where you want to invest and how much you want to put in, subject to IRS regulations.
If you’re looking for the IRA that’s right for you, consider opening a gold IRA, which can both help you grow your net worth safely by protecting your savings against inflation and diversify your portfolio further.
Priority Gold is an industry leader in precious metals, offering physical delivery of gold and silver. Plus, they have an A+ rating from the Better Business Bureau and a 5-star rating from Trust Link.
If you’d like to convert an existing IRA into a gold IRA, Priority Gold offers 100% free rollover, as well as free shipping and free storage for up to five years. Qualifying purchases will also receive up to $10,000 in free silver.
To learn more about how Priority Gold can help you reduce inflation’s impact on your nest egg, download their free 2026 gold investor bundle.
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Warren Buffett Archive (1); @ramitsethi (2); Nasdaq (3); Fidelity (4); Gallup (5); Investment Company Institute (6); Pew Research Center (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.