It feels amazing to see my Vanguard brokerage account hit over $100k at such a young age. I have worked hard in both the earning and expense side in my investing journey. It feels great to see the progress and growth to hit over $100k in such a short amount of time. Here are four things that were critical for me to hit this major milestone!
Core Principle #1: Ensuring My Money Makes Money For Me
The first and most important thing I have done is ensuring my money is also making money for me. This is my first of three core principles that are fundamental to my values.
If you are keeping your money in a savings account earning less than .03%, your money isn’t working as hard for you as you are working for it. If you are keeping your money in cash stashed under your bed, again, your money isn’t working hard enough for you. Keep your money invested in assets so it can work as hard for you as you work for it.
Core Principle #2: Start Early To Realize The Power of Compounding
The earlier you begin, the better off you will be in the long run. The main driver here is compound interest and how powerful it is.
Core Principle #3: Eliminate Your Largest Expense By House Hacking
A key to having a lot of money to invest is by saving. The largest expense for 99.9% of American’s is housing. If you house hack, there are a few things you are doing. First, you are eliminating your largest expense. This allows you to automatically save that money, if you are smart. Next, if you buy a home, you are building equity in the home by having your tenants pay your mortgage for you. Finally, there are tax advantages to owning real estate. I won’t bore you with all the details on the advantages here, but you can read this article to understand a little more on the tax advantages of investing in real estate.
Item #4: I Focused On Both Sides Of The Equation
Too often, I hear people talking about cutting the small expenses. What they sometimes forget is the fact that there are two sides of the equation. The first side is expenses and the second is expenses. I have put a heavy focus on both increasing my overall income as well as decreasing my living expenses. This focus on both sides of the equation has been a critical part of being able to get to $100,000 in my Vanguard brokerage account.
Sometimes it is good to take a step back and celebrate how far you have come. I am often very hard on myself that I am not doing enough and need to do more. I am often slow to celebrate the amazing progress I have made in trying to do big things with my life.
To fully grasp this accomplishment, if I were to not touch this account for 30 years, let’s see what it could look like. If we were to use a 7% interest rate compounded yearly, in 30 years, my $101,000 would look like this.
That’s right, if I were to not touch this account (no adding money and no removing money), it would be worth $774,000 in 30 years. Now, I don’t plan to stop here. I am going to continue automating my investments every week. At least, until I hit a number where I feel financially independent.
So for a very short period of time, it is time to celebrate! $100,000 let’s get it! Time to get to $200,000 and on!
Key Takeaways:
- Ensure your money is always working as hard for you as you work for it.
- Invest early to realize the power of compound interest
- House hack to eliminate your largest expense
- Focus on both increasing your income and decreasing your overall expenses. It isn’t enough to focus on only one or the other.
