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How to Save $100,000? (4 EASY STEPS TO YOUR FIRST 100K) - YouTube
Channel: Monies with Steph
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one of my biggest financial goals in my
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20s is to save my first 100
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000 i am only 24 right now so i still
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have quite a few years ahead of me
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but i can already feel the pressure and
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this is because
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saving my first 100k is way harder than
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i thought
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it seems very difficult because every
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single time i check my investment
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account
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it just doesn't look like it's moving or
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progressing at all
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so it does get very frustrating and then
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i realized that i am the one who is
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making all of this hard for myself
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because i didn't have a plan so in this
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video
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i will talk about why saving your first
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100k
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is so damn difficult and then i'll show
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you my plan
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on how i'm going to save my first
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hundred thousand dollars
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before my 30s and by the end of this
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video you will also know how
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exactly i figured out how much i need to
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save each month to reach my goal
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so if you're trying to save for your
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first 100 000 then keep on watching
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hello everyone and welcome back to
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monies with steph
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if you're new hi i'm steph and i make
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money related videos
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i like to share what i've learned about
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personal finance investing
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and money this channel so if this is
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what you're interested in
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hit the subscribe button down below so
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we can keep learning together
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if you are trying to save your first
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thousand dollars right now
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you know the pain i mean even
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charlie munger vice chairman of
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berkshire hathaway
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said the first hundred thousand dollars
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you gotta do it the reason why this is
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so hard
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is that the first hundred thousand
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dollars is purely based on how much you
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save and how fast you save
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when you have less than a hundred
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thousand dollars your investment returns
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is just so
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small that it doesn't really help propel
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your net worth any higher
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so it's all about how much money you
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save each month
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for example you want to go from zero to
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100k in five years
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and you can comfortably save fifteen
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hundred dollars each month
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you also want to make sure that you're
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getting some gains or returns with your
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money
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so you're going to put them in an
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investment account but because this is
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your hard earned money
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you don't want to take too much risk at
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first so let's say your portfolio annual
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return right now is five percent
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well good news you will have a little
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over a hundred thousand dollars by the
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end of fifth year
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with about four thousand dollars to
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spare but
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the important thing to point out here is
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the breakdown
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of your first a hundred thousand dollars
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from this little graphic
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you can see that eighty six percent of
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your hundred thousand dollars
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is from you saving money and only
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fourteen percent is from
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interest or returns so as you can see
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you're doing most of the link work here
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and let's say you can save more money
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each month yes
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you reach a hundred thousand dollars
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faster but in reality
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is that you're still doing most of the
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work and let's say you find an amazing
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investment strategy that gives you
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annual returns of 12 you still
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need a huge chunk of money before seeing
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much from your returns
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if you still don't believe me you need
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to check out zac from four
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pillar freedom he actually went in depth
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in this so i'll link his article down
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below
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i mentioned that you need a pretty big
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chunk of money
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before you start to see your returns
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actually propel your net worth
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so once you save up a hundred thousand
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dollars and you're investing a portfolio
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that gives you four percent dividend
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every single year
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that still makes up to 333 dollars each
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month
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and if you reinvest all your dividends
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you'll be making more in year two
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without really adding any money so every
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year
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your money just goes bigger and bigger
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and the best part about this
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is that you don't have to put in any
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effort and this
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is why people say that after your first
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a hundred thousand dollars
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your wealth snowball starts so let me
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show you the difference between your
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first a hundred thousand dollars
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and your next 100 000 or your second
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hundred thousand dollars
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so i showed you this graphic before but
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let me recap
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you saved your first 100 000 dollars in
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five years
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by saving fifteen hundred dollars a
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month let's say
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in year two you are still saving fifteen
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hundred dollars each month because
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you're very disciplined
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and still earning five percent interest
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instead of waiting for another five
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years
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for your next 100 000 dollars you only
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need four years
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and you'll have over two hundred
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thousand dollars and the biggest
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difference between your first
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and second hundred thousand dollars is
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their composition
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or is what they're made out of the first
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hundred thousand dollars
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is eighty six percent savings and
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fourteen percent interest
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but when you reach two hundred thousand
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000
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your portfolio is made out of 78 savings
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and
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22 interest if you keep this up
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three more years later you'll reach 300
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000
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and another three to four hundred
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thousand 000
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and if you want to get to 500 000 you
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only need
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two and a half years so you see the more
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money you have in your investments
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the more money you earn is coming from
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interest so
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instead of you doing the leg work your
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money is working for you
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but how do you save so much money i
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think at this point we can
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all agree that saving your first 100 000
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is a medium to long-term goal and for
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anything that is not short term
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i think it's best that we have a solid
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plan
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so i use the exact steps from ben the
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ford
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he's a contributor on medium.com so in
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his saving plan
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there are only four steps and the first
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one being
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knowing your own net worth after you
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calculate your net worth
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you will know exactly where you're
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starting there is no
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one-size-fits-all plan here because
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maybe you still have student loans or
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maybe because you already have
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forty hundred thousand dollars saved up
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and because of this
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your starting point and my starting
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point is probably going to be different
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so i'll use myself as an example i've
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saved up
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22 000 since 2019
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so for my starting point it will be 22
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000
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and step two is choose your saving and
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investing strategy
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you can choose to open a savings account
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and put your savings in there
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but i don't really recommend it right
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now given how low our interest rates are
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so i put mine into wealth simple and i
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get around
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5 returns on my portfolio annually
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if you don't know what to do with your
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money or where to invest in
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i have a video on all the major asset
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classes that you can invest in
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and i'll link it down below but the most
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important part about step two
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is that you're earning interest you're
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putting your money somewhere that it's
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not going to decrease in value
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and also that your money is working for
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you
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and step three is to calculate how much
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you need to save each month
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so let me show you how i did this so you
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can
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open up excel go over the formulas and
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find financial
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look for pmt and click on it
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at rate you put your annual return
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divided by 12
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months if you are just starting or you
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don't know what your annual return is
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going to be
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you can use these percentages by pwl
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capital as a guide
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i know there are some people who said
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their annual return
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is ten to twelve percent in stocks but
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the average is most likely five to seven
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percent
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and i think it's better to be more
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conservative at this point
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just to make sure you'll be hitting your
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goal at the end so from step two
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i know my annual return is about 5 so
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i'm putting 5
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divided by 12 just like that you put
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down how many months
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until you want to have 100k
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i'm 24 and i want to have 100k
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when i'm 29 so that's 5 years in total
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so i'm putting 16 months then for pv
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put in what you have saved up already or
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what you owe
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if you have student loans or credit card
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debt you have to take that into account
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when you're saving
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so from step one i know i saved up 22k
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already so i'll put down 22 000
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right here for fv
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put down what your goal is my goal is a
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hundred thousand dollars
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so i'll put negative a hundred thousand
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dollars
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remember to put the negative in the
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front or else this won't work
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okay so after that you can just leave
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type blank
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and click done so excel tells me that i
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need to save at least one thousand
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fifty five dollars and twenty nine cents
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each month
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for me to reach a hundred thousand
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dollars in five years
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and now the final step is to put your
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savings on automatic
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when i first started saving money i
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usually just saved whatever i have left
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by the end of the month
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and of course there are quite a few
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months i just didn't have any money left
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because i spend it all on clothes
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food makeup who knows
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and this is exactly why now i choose to
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save
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money the first thing each month a lot
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of banks actually
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let you set automatic withdrawal dates
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at specific dates
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so you can just do this maybe on every
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payday
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i started doing this with wealthsimple a
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while ago and it really helped with my
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savings
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i also go the extra mile so i set up the
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roundup feature there too
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so whenever i make a purchase like buy
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groceries or food with my debit or
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credit card
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they would deposit spare changes into my
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investment account
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so right now i set 650 dollars to be
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transferred
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into my investment account twice a month
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on the 15th
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and also on the last day of each month
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and on top of that
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each week i'll add in about six to seven
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dollars
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just from the roundup feature so yes i
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am saving
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more than what the excel is telling me
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so ideally i'll reach my goal a little
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earlier than the end of my fifth year
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but it doesn't really change things that
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much
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because the first 100k is just me saving
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money it's still me doing most of the
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work
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so this is how i planned my savings and
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stayed on track for about a year or so
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and this is it thank you so much for
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watching and until next time
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you
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