Charlie Munger Explains Why the First $100K is the Hardest to Achieve

Legendary investor Charlie Munger, Warren Buffett’s longtime business partner at Berkshire Hathaway Inc. (BRK.A, BRK.B), understood the psychology of wealth building better than most. “The hard part of the process for most people is the first $100,000,” he once observed. “If you have a standing start at zero, getting together $100,000 is a long struggle for most people.”

The math proves Munger right. If you start saving $650 per month at a 7% annual return, it will take you 9.5 years for your savings to reach six figures—just shy of a decade of disciplined saving. However, after that slow climb, your wealth grows exponentially quicker thanks to the magic of compound interest.

Munger said that those who reach the six-figure milestone faster share three key traits: they’re “passionate about being rational, very eager and opportunistic, and steadily underspend their income grossly.” Below, we take you through what else you need to get to $100,000 and beyond.

The Brutal Math of Building Your First $100K

“You start saving early in your career—a few hundred dollars here; a few hundred dollars there. And despite compound returns, it adds up painfully slowly,” says Hilary Hendershott, president and chief advisor of Hendershott Wealth Management.

These first years are truly the most brutal because your money isn’t working for you yet. Take, for example, year one: you contribute $7,200 but only earn $546 in returns.

“That first $100,000 feels like a crawl. You’re doing all the right things, but it takes time to see real traction. I remember those early years clearly. They stretched me and shaped me—but once I got through them, the momentum kicked in fast,” explains Taylor Kovar, CEO and founder of 11 Financial. “For most people, it takes close to a decade. You’re learning to save, to invest, to avoid lifestyle creep. And every step forward feels slow. But it’s building the discipline that sets you up for everything that comes next.”

When Compound Interest Finally Kicks Into Overdrive

What comes next, you ask? The years in which the interest-related growth on your funds becomes larger than your monthly contributions. Your money is working for you. 

“After you cross that $100,000 mark, things pick up. Your money starts growing without you having to work so hard for every dollar. That’s when it starts to feel exciting. You’re not just building wealth anymore, you’re watching it multiply,” remarks Kovar.

Assuming an even 7% annual return, the 9.5-year mark is nearly the exact moment your money starts working for you. Between year 9.5 and year 10.5, you invest $7,800 in cash but receive $14,833 back in accrued interest, or almost double your money.

“The first $100K is where most people quit, but it’s actually where the magic starts. When your money begins doubling every seven to 10 years instead of crawling forward dollar by dollar, it’s eye-opening,” says Ryan Greiser, a financial advisor and the co-founder of wealth management platform Opulus. 

“The psychological shift is huge: you stop feeling like you’re pushing a boulder uphill and start watching your wealth build momentum. Track your monthly investment returns, not just contributions. Once your returns consistently beat your monthly savings rate, you’ve crossed the threshold where your money works harder than you do,” he says.

Strategies to Get Through the Painful First Phase

We all want to be millionaires—but how can we move past the slow burn of the first decade of savings in order to get to a seven-figure status?

“Every journey begins with the first step. The key is to get started on your way to that first $100k,” says Hendershott. “Small practices, applied consistently, add up to big differences in the long run. But nothing is as important as getting started.”

Chloe Moore, Founder of financial advisory firm Financial Staples, recommends automating your savings in order to get a disciplined head start. 

“Get in the habit of saving a percentage of your income annually and increase the amount as your income increases,” she says, adding, “Set rules to save a certain percentage of ‘extra’ money, like bonuses or tax refunds, ahead of time so you don’t just spend it by default. If you’re paid biweekly, there are two months out of the year when you receive three paychecks. You could also save those entire paychecks or increase your recurring savings to equal the amount of those paychecks throughout the year.”

Greiser stresses that there’s no way to game the system—instead of trying to optimize your way to $100,00, you should be disciplined in your saving habits.

“People get trapped trying to find the perfect investment strategy when the real accelerator is increasing their income and savings rate. If you’re making $100K and only saving 10%, you’re looking at that full decade. Bump it to 20% through raises, side income, or cutting major expenses, and you cut years off the timeline. Focus on increasing income and your savings rate before you optimize your portfolio. An extra $1,000 monthly gets you there years faster than chasing an extra 1% return,” he explains.

The Bottom Line

“Saving your first $100k is important for many reasons. It generally indicates that you have established the habit of saving consistently and living below your means. This habit will continue to serve you in growing your portfolio. Compound interest, along with your consistent savings, can result in exponential growth,” says Moore.

Getting to the six-figure mark is tough, but important. Only after you cross this threshold will your money start to work for you. But getting there takes discipline.