Ways To Save Your First $100K – Have you ever lost money? Probably yes. And it didn’t feel great. But how would you feel if you have lost 30 billion dollars? That’s an insane amount of money.
Even the vast majority of billionaires don’t have that kind of wealth. 1 billion dollars is enough to make you and your entire family super-wealthy, 30 billion dollars would make you one of the most influational people on earth, that’s more than the GDP of some countries.
But guess what, that’s exactly how much Mark Zuckerburg lost in the last market correction. Now poor Mark Zuckerburg is not even on the list of the top 10 richest people in the world and is worth just 84 billion dollars.
The question is – how much did you lose in the last market correction? It doesn’t matter if you are a long-term investor because corrections happen all the time. They are part of the process. What matters is saving your first 100K dollars.
While investing in yourself, going to school, and learning are all important, what makes you truly financially free is the size of your investment portfolio. The problem with investing is that all you can get is an average of 10 percent annually. For most people, that’s peanuts because most people are ready to invest a few thousand dollars a year at best.
10 percent on a thousand dollars a year is just 100 dollars. No one is going to take that seriously! But 10 percent on a million dollars, that’s 100K dollars, more money than most people make in an entire year.
So the challenge is to get to that point where your investments can earn enough on their own. A million dollars is not a joke, especially when most people earn around $50K and live paycheck to paycheck. But 100K dollars is realistic for most people. That’s the moment when your investments earn enough to keep growing on their own.
If you save 100K dollars by the time you are 30, without investing a single dime, your $100K will turn into 2 million dollars before you retire. However, saving your first 100K dollars is the hardest part, because the moment you achieve it, the rest gets easier.
At the same time, I want to point out that it depends on where you are. 100k in California is very different from Alabama and in Thailand, 100k is much different from the US.
But for the sake of simplification, we are going to use the 100K benchmark. The main question is – how do you save your first 100K dollars? There are multiple ways to do that, but it all depends on how much you are ready to sacrifice! You can live on a super tight budget for a couple of years and save more than 70 percent of your income, or you can be a bit relaxed and live a bit more comfortably, but it will take twice or trice longer.
The moment you clarify that for yourself, here are 5 ways you can follow to save your first 100K dollars.
Ways To Save Your First $100K
1. Real estate
This is probably one of the best ways to do that. The point isn’t to end up with 100K in cash but to have 100K worth of assets because, at the end of the day, inflation is going to devalue your cash anyway, while if it’s an asset, it will at least catch up with inflation. The biggest obstacle is the downpayment, but that’s about it.
Like it or not, having a roof over your head is a must, and if you don’t have a place of your own, you will most likely rent one. So instead, why not take a mortgage and keep building your equity over time.
Of course, a house has its own set of problems, but as home prices rise, rents prices do rise as well, and even if you leave that place, it can be turned into a source of cash flow.
This is, of course, not the best option for everyone because if you live in Vancouver, for example, where the average home price is over a million dollars, your downpayment alone would be 200K dollars which for most people is not an option.
If you could take advantage of super-low mortgage rates in the last 2 years, then good for you. If you haven’t, it’s an option to consider if you can find a good deal in the market. Owning a house has its set of problems, but it’s also one of the best ways to build wealth.
2. Be first in any industry
Here is how any new technology works. Whenever a new tech comes up. It’s only popular among enthusiasts. People who are deep into it. It takes a few years before it turns mainstream if it’s good enough. If it’s not, then it will just disappear as most innovations do.
But before most people figure out how it works, the enthusiasts make most of the money out of it. Take the example of NFT. They started getting popular in 2020, but they have been around since 2015. Cryptocurrencies are another example. They have been popular since 2017, but bitcoin was created in 2009 after the real estate crash.
Appstore is another example. When Apple introduced iPhone in 2007, it created the Appstore the following year. Whoever saw the potential of AppStore created apps that instantly became multi-billion-dollar companies such as Whatsapp.
The point is to take a look at new emerging technologies, understand them, and the moment they turn mainstream, you can make make a fortune.
3. Side Hustle
I know that side hustles are not known for making a fortune but not in the age of the internet. Some people make 6 figures a year on Fiverr. Of course, they are a minority, but the fact is, freelancing jobs are becoming ever more popular.
Hiring someone full-time is not a joke. Do you know how much taxes you have to pay per employee? Insurance alone will cost you a fortune if you are a small business. That’s why more and more small businesses are turning to freelancers. While you might not be making 6 figure writing blogs, for example.
You can make a few extra hundreds if not thousands of dollars every month if you push yourself hard enough. Find out what you are good at, whether it’s writing, editing, researching, designing, whatever can be done remotely, and spend your free time freelancing. Any income you get from freelancing should directly either go to your savings account or brokerage, where you can invest it in some assets such as vanguard investment funds.
We live in an age where everything can be googled, literally everything. But at the same time, a lot of people prefer someone to teach them and answer all of their questions instantly instead of them putting the time to search for everything themselves.
Take NFTs, for example, anyone who is getting into this industry can find everything they need on the internet, but businesses are still paying a lot of money to young teenagers who have spent countless hours reading about NFTs. It could be anything else. If you love math, you can teach kids math.
Some so many rich parents want their kids to excel in school. And it’s not a difficult job. Once you get used to it, you just keep doing the same thing over and over. The most important part is that you shouldn’t spend that money on yourself. It should be either invested or saved.
5. Extreme Frugality
If you can’t follow any of the options above, then your only hope is extremely frugality for a few years. To be honest, this is what I did when I started my journey to financial freedom. I didn’t have many skills. I was just building a business, so what I did was limit my expenses to the extreme. After a few years of saving, I stopped but I also saved enough to invest. I don’t recommend this method because, at the end of the day, there is a limit to how frugal you can go. There is a point where you can’t go lower because you need a roof over your head and food on the table.
100K is a lot of money, but in the grand scheme of things, it’s not. It’s not going to make you rich but it will bring you to the position where you can start building your wealth. Where you can stop worrying and be confident that no matter what, your little tree is growing even without your contributions.
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