The first $100,000

The First $100,000 Takes How Long to Save?

The first $100,000 takes a long time, much longer than the average person has the patience to see through unless you inherit, sell a business or win the lottery.  If you have the temperament and the desire, I truly believe anyone can do it. To reach the first $100,000, all you need to do is three things; live below your mean’s, invest the excess capital intelligently and then wait.  Be extremely patient and then, wait some more.  One of my favorite Charlie Munger quotes is:

“The big money is not in the buying and selling … but in the waiting.”

Unless you are naturally frugal, living below your means and investing the difference can take an extraordinary amount of self-control.  Add in a little planning and an appetite for knowledge and you will certainly succeed. Even if you start with saving first and learn about investing later, you will be ahead of the game. In the beginning of your journey you are not risking much and the lessons you learn will pay off later in life.  You don’t need to be an investing genius.  In fact, Warren Buffet has said:

“Outstanding long term results are produced primarily by avoiding dumb decisions, rather than making brilliant ones.”

The Biggest Hurdle is Yourself

The returns you make in the beginning will not be material. This is why many people quit.  If you love dividends, it can be demotivating seeing only $10 added to your account per month to start.  Perseverance at all costs is required to get through the initial months and years.  After that, you have a lifelong habit of adding to your investments.  Over time, the capital does the heavy lifting.

Start saving now – time is on your side. If you only have $50 per month, start there. As you pay off debts like student loans or car payments, use that surplus cash flow to increase your investments – do NOT go finance other consumer purchases. Likewise, if you receive a raise – continue to increase the amount you are saving.  In time your $50 per month may reach a point of $5000 or $6000 per month. At that point, it really starts to snowball for you and the time it takes to reach each additional milestone becomes less and less.

This was my situation.  That is, a college educated, married couple with no kids just starting out in life with small debts like student loans, car payments and a reasonable sized mortgage.  If you are on a single income or are deeply in debt your results will probably not mirror mine.

If you over bought on a house or are in serious debt, make the necessary changes first before focusing on investing.  I never really considered myself as super frugal, we just never over exeeded our lifestyle and always planned for saving.  This is simply our experience.  If you are in the early years of accumulation, I hope this provides some motivation.

How long it took me to save the first $100,000 and thereafter

For me it took 2 years and 1 month to save and invest $100,000 in my taxable brokerage account.  I funded this account after taking advantage of deferred tax investments.  Primarily it was funded on a monthly recurring basis or with lump sums from company bonus’s.

First $100,000 – 25 months

Second $100,000 – 8 months

Third $100,000 – 13 months

Fourth $100,000 – 7 months

Fifth $100,000 – 11 months

Sixth $100,000 – 3 months

Now we are adding $100,000 every 3 to 6 months depending what the stock market does.  Some months are better and some are worse.  But now we are on cruise control.  When we get a nice bonus, we could upgrade our crappy kitchen, but we usually decide to invest it as intelligently as possible.


Are you the type of person that impulse buys a new Blue Ray at the checkout line? You watch it once and it sits in the media console. Are you the type of person who splurges on fancy dinners every weekend? What kind of booze is sitting in you liquor cabinet? Single malts, Jack Daniels or some whiskey in a plastic bottle? How new is your car? Did you negotiate the financing it based on the monthly payment?

Yes, I too have been a victim of these extraneous purchases. Now I have blocks of Disney stock pumping out dividends twice a year instead of a collection of DVD’s gathering dust.

Restaurant stocks have been in my portfolio in the past and likely I will invest in them in the future.

Single Malts are my favorite and I splurge from time to time, however I consider it funded by my Diageo and Brown Forman dividends.

As for the car, after securing my first job out of college I fell victim to financing a brand-new Chrysler. The monthly payment fit so well in my new salary. And I needed a new car to drive 5 miles to work and back. Now, as one of my value investments, I watch my auto investment grow. I usually hate investing in auto manufacturing, but a year ago there were some attractive valuations that could not be passed by.

The Wake up…

Luckily for me, sometime between the ages 21 and 25 I woke up and decided to implement changes to my life for the betterment of my personal finances. As an IT professional, I knew there is always the potential for my job being outsourced, leaving me in panic mode to replace my income to pay off debts.

Self-control and delaying gratification can bring significant joy and lower stress levels in your life. You may be ridiculed for not having the latest iphone or fancy robots like a Roomba, but over time you find the joy of vacuuming your own carpet in a house completely paid for. Or maybe you believe Apple will continue to dominate the gadget market and decide to invest in a few shares and watch the investment grow.

Either way, eliminating impulse buys and delaying gratification can give a large boost to your monthly bottom line.

A Little Planning

How do you manage your budget? Some folks like to track every expense and categorize them month over month. There are free online tools to help with this process like personal capital or Mint. While I do this from time to time, my strategy has always been to treat investments as an expense and pay them at the beginning of the month.

I use Computershare and other transfer agents to automatically dollar cost average into Blue Chip stocks that I believe have durable competitive advantages. Some of these I intend to  hold forever and gift to my son’s.  I set these investments to automatically withdraw money from my central account every month and never think about it again until I review the annual report.

I direct funds to my primary brokerage accounts. These deposits get added to a pool of dividends and sit in a money market fund until I decide to do something intelligently with the funds. For other uncertain large deposits we receive, we always invest them unless they are marked for a large purchase. Historically these additional deposits are bonus’s paid out by our employer. We are still waiting to see a large gift from a rich uncle or an inheritance, but I will not hold my breath on either of these.  We have never received a single penny of inheritance.

Automating these allocations will free up your time to research intelligent things to do with the funds. Psychologically it becomes much less enticing to want to spend the money.

Appetite For Knowledge

What do most of the greatest investors of our time do the most?  They read, a lot.  You don’t need to be an investment guru to save $100,000 but you need to know enough to not get taken advantage of and avoid dumb decision making.  This is why I prefer to be a DIY investor.  There are so many people trying to obtain your hard earned dollars.

Most people only need to invest in index funds and sprinkle in some bonds.  Just keep adding in.  For others, you might want to be a little more hands on with your investments.  Whatever you decide, pick a strategy and stick with it, and of course be patient and wait.

I will actively share book recommendations over the course of this blog.  However, I read much more than that.  I love trade journals, analyst reports and more than anything I love reading a companies annual report and listening in to the quarterly meetings.  I love understanding how businesses (and the mangers) make money and deploy their own capital.

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