Why the First Million is the Hardest

Picture yourself in the realm of financial independence, with your bank account boasting a stash of millions.

It is a vision that often feels distant, reserved for those who seem to have cracked some secret code.

Stories of people retiring at ages that feel absurd—30s, 40s, 50s—might leave you scratching your head, wondering: How in the world do they manage that? The truth is, it’s not a breeze, but it’s definitely doable.

Brace yourself for a reality check: The first million is the Everest peak.

However, once you conquer it, the path becomes smoother.

Let’s delve into why that initial million is the toughest nut to crack and how it paves the way for smoother sailing thereafter.

First Million

You might be shocked at how quickly your net worth increases once you pass the $1 million threshold.

To get that first million dollars, it can take years and years, and to get the next million, it might only take ten.

The first million is the hardest for many reasons, but the second million is considerably simpler.

The first Million Comes Mostly from your Income

When your gaze is set on that coveted first million, it often requires hefty portions of your earnings just to meet your day-to-day needs—food, clothing, shelter, and the occasional indulgence.

Amid these demands, saving and investing might feel like far-off concepts.

At this stage, a considerable chunk of your wealth stems from your steady income.

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The game shifts gears once you step into the millionaire’s arena. Suddenly, your money transforms into an eager participant in the growth game.

With a million dollars at your disposal, your wealth is no longer solely tied to your daily grind.

Say you invest a million dollars and rake in a modest 5% annual return—around $50,000 without you lifting a finger.

And do not forget the magic of compound interest: Your second year could see you pocketing $52,500 with a mere wave.

Millionaires Have Less to Lose (Well, Not Literally)

When the million is yours, a fresh sense of security wraps around you. Mortgages, car payments—these worries take a back seat. It is like you have been handed a safety net, emboldening you to take calculated risks.

Those daring business ventures that once seemed too dicey? Now, they are realistic option.

With a million-dollar cushion, even if a few risks do not pan out, you won’t sink. The fear of losing everything diminishes.

Millionaires Get Better Offers

The moment you join the millionaire club; a new world opens up. Companies and people treat you differently—no, not with fawning reverence, but with enticing offers.

  • The Vanguard 500 Index Fund, which matches the returns of the S&P 500 stocks, is the most popular mutual fund. It has extremely low annual expenses of only 0.14%.

However, if you put $100,000 in Vanguard, you will receive “Admiral Shares,” which have a 0.04% expense ratio.

Your expenses are low in either case, however the Admiral Shares of this fund have 71% lower expenses.

On $100,000, you’ll only save $100 per year, but it’s something. Over ten years, you save $1000, and that $1000 is invested in the fund and earns profits rather than being taken away from you.

  • A friend of mine retired early and joined a “angel fund,” which invests in extremely small startup enterprises.
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To be allowed into the fund, he needed to have a particular quantity of money.

He is able to identify promising enterprises and decide to invest in them before others are aware of them. Of course, this is a dangerous thing to do, and he says he has rarely done it.

However, he gains access to other high-net-worth individuals who are also members of the fund.

He is obtained more lucrative chances from casual talks with these folks than by investing in the fund. But he wouldn’t know if he didn’t have the money to put into the fund in the first place.

  • Travel agencies, credit card firms, and a variety of other businesses provide better rates on their products and services to those with money.

Why? They want you as a long-term customer since they know you have more options than folks with less money.

This truth can indirectly increase your wealth by saving you money, allowing you to maintain, invest, and expand what you currently have.

The rich get richer

For all of the reasons stated above, the first million is the most difficult, and the subsequent million is significantly easier.

The wealthiest get richer, while the poor struggle to climb the social ladder.

How you feel about that fact is most likely associated with how much money you have right now, but it is the truth in our capitalist world.

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Peering at multi-millionaires may seem like peering through a glass wall, but remember, they were once on the same side as you.

They started with dreams and determination. The first million is your stepping stone, your initiation into a world where your money works for you.

Beyond that milestone lies a path paved with opportunities, a journey that gets more exciting with each turn.

So, embrace the challenge, secure that first million, and let it propel you towards the financial horizon you envision.

Frequently Asked Questions

Is it easier after the first million?

However, you can become a billionaire by making wise investments and wise savings. And you may increase that wealth over time by utilizing the power of compounding returns. Making your first million is the most difficult, but making your second million is simpler.

The second million is simpler, why?

  • In terms of math, $1 million is a 100000000% increase over $1, whereas $2 million is only a 100% increase over $1 million—much simpler.

Compound interest makes it possible to earn additional millions with just a little perseverance.

2) It is not a continuous march to $1MM because you make more mistakes in the beginning, and you might face concerns.