Compounding is your bestie.
Acceleration
The first $100k is the hardest, because you're starting from zero. There's nothing there to grow yet---you have to start stashing away. As you progress, growth gets faster and easier.
- $100k to $200k is a 100% increase
- $200k to $300k is a 50% increase
- $300k to $400k is a 33% increase
- $400k to $500k is a 25% increase
- $500k to $600k is a 20% increase
- $600k to $700k is a 17% increase
- $700k to $800k is a 14% increase
- $800k to $900k is a 13% increase
- $900k to $1M is an 11% increase
- $1M to $1.1M is a 10% increase
- $1.1M to $1.2M is a 9% increase
- $1.2M to $1.3M is an 8% increase
- $1.3M to $1.4M is a 7.5% increase
- $1.4M to $1.5M is only a 7% increase---the tipping point!
The 7% Tipping Point
Stock markets can be fickle---no risk, no reward---but when reviewing a snapshot over a long period of time, it's reasonable to expect a positive return.
From 1993 to 2023, the S&P 500 returned an average of 10%. This includes the dot-com bubble, Y2K scare, 9/11, wars, the Great Recession, Covid, the housing crisis... the world is messy. Adjust down for 3% inflation, and you hit 7%. The portfolio will be growing over $100k a year, all on it's own. That is a money machine.
TLDR: Money grows faster when there's more of it, so start saving.