ladies and gentlemen why is it that a workingclass person has to work extremely hard to make a small sum of money while a billionaire can simply sit on a yacht not lift a finger and make a 100,000 times more well it's because of the number one principle of wealth building money makes money I mean there's a quote that goes to turn $100 to $110 is work to turn $100 million into $110 million is inevitable the more money you have the quicker and easier it will grow and for the average person the hardest part of your
wealth building Journey will be going from zero to $100,000 because it takes an extreme amount of discipline patience and sacrifice however once you hit that $100,000 Mark your net worth starts to explode growing at a much quicker pace and why is that well in this video I want to EXP explain seven reasons why your net worth starts to explode once you hit $100,000 because once you understand why you're much more inspired to reach that $100,000 Mark and the first reason is the power of scale now I will say this over and over again in this
video because it's such an important component to wealth building money makes money that is the number one principle to Building Wealth the more money you have the quicker it'll grow for example the stock market returns an average of 10% a year so if you have $1,000 invested in the market a year later you will have gained $100 if you have $10,000 invested a year later you will have gained $1,000 but if you have $100,000 invested a year later you will have gained $10,000 the more money you have invested the bigger your returns will be and
so the first reason your net worth starts to explode once you hit $100,000 is because $100,000 is the moment when you start having scale where your returns are much bigger $100,000 is the point when your money starts to grow at a much quicker Pace when your returns are noticeably larger which brings me to my second reason the magic of compound interest now the biggest misund understanding that people have with wealth building is that they think that wealth grows like this in a linear line however that is not true wealth grows like this in the beginning
it's slow where there isn't much happening and then all of the sudden it starts to grow at a much quicker Pace in an exponential curve and that's because of something called compound interest which is getting interest from both the principal sum and previous interest gained in compound interest is a very simple concept to understand let's say you have 10 $1,000 invested in a year you will gain $11,000 of Interest however in the second year you will gain $1,100 in interest 100 more than the previous year and that's because you're receiving interest from both the original
$10,000 but also the $1,000 of interest you made the previous year and the reason your net worth starts to explode at $100,000 is because this is the point when compound interest really starts to pick up for example if you invest $1,000 a month it'll take you about 6 years to reach $100,000 which is a long time however as I said $100,000 gives you scale where your money starts to grow at a much quicker pace and reaching the next $100,000 will only take about 4 years then to reach the next $100,000 takes about 3 years money
makes money and the more you have the quicker it's going to grow through compound interest now the third reason is making money starts to go from active to passive all right so up to this point we've spoken about the power of scale in the magic of compound interest and these two things will allow you to go from making money in a very active way through work to starting to make a sizable amount of money in a passive way through your Investments for example if you have a salary of $50,000 and have $110,000 invested with a
yearly return of $11,000 then 98% of the money you make is active and only 2% is passive however if instead you still have that salary of $550,000 but now have $100,000 invested with a yearly return of $10,000 then 83% of the money you make is active and 177% is passive which is a size amount I mean 17% of the money that you make is completely passive and the reason your net worth explodes once you hit $100,000 is because this is the point when you're no longer making 100% of your money in an active way but
some of the money you're making a sizable amount of the money is now passive your money is making you money now the next reason is the power of margin now I'm must say it again the concept that you really need to understand money makes money and as we've seen the more you have the easier it is to make however that is not the only thing that money does for you money also gives you something called margin which is a buffer between you and being broke in margin is a powerful thing because margin gives you time
which ultimately gives you options and those options options can make it easier to help you make higher amounts of money for example imagine two employees both who make $70,000 a year but one with $5,000 and the other with $100,000 then imagine all of the sudden they both got laid off from their jobs what do they do next well because this person only has a margin of $5,000 they will have to be aggressive with job hunting take the first thing that comes to them even if it's a lower paying position however this person who has a
margin of $100,000 has time to look for a good job and can hold out until the right position comes making the same or making more than before margin gives you time which ultimately gives you options and so the reason your net worth starts to explode once you hit $100,000 is because what $100,000 is when you have a sizable amount of margin in your life it can hold out to find the best opportunities you no longer have to settle and just take the first thing that comes your way now the fifth reason is the Mastery of
money skills now I don't claim to be an extremely rich person who has made a million dollars I mean I just reached my first $100,000 myself about a month ago and I spoke about it in this video right here but what I can tell you about reaching $100,000 is that it is a journey that takes a lot of time where you learn how to master many money skills along the way for example going from 0 to $10,000 teaches you a basic set of skills like how to create a solid plan then going from $10,000 to
$50,000 teaches you a little bit more advanced skills like how to organize money and finally going from $50,000 to $100,000 teaches you more advanced skills like how to grow your money as well as learning p patience discipline and sacrifice along the way there are so many important money skills that you master on this journey to reaching $100,000 and your net worth starts to explode once you hit $100,000 because once you have $100,000 you have mastered many Financial skills in life that help Propel you forward once you reach $100,000 more than likely you have mastered many
money skills that will help you continue building your wealth at a much quicker Pace now the sixth reason is the ability to increase investment amount so as I just said on the journey to $100,000 you learn how to master many money skills one of which is how to organize money and chances are once you hit $100,000 you have completed your emergency fund of 6 to 12 months of living expenses because once you have completed your emergency fund you can stop focusing on saving and focusing more on investing at a much more aggressive pace which helps
your Investments grow and your net worth grow at a much quicker pace for example if your emergency fund was completed and you went from investing $500 a month to $1,000 a month you would reach the next $100,000 in 4 years versus 5 1/2 years and so your net worth start to explode once you H $100,000 because you have a very good Financial safety net and you can focus more on investing more aggressively which helps grow your money at a much quicker Pace now the final reason your net worth explodes once you hit $100,000 is the
ability to breathe more when you look at various problems that people have in life a huge cause of these problems is the lack of money struggling to afford Necessities behind on bills in one surprise expense from Financial ruin so many of our problems arise from not having enough money in life however once you reach a net worth of $100,000 many of these problems disappear granted you're still going to have problems because money doesn't solve all problems but having this sizable amount of money allows you to breathe a little bit more because as I I said
in this video you have scale compound interest is starting to take off you're making more passive income you have margin you have mastered many money skills and you're investing more when it comes to money and wealth building $100,000 is that magic number that gives you the ability to breathe a little bit more in life because once you hit that number of $100,000 things start to change in your net worth starts to grow at a much quicker pace so push through the Journey to $100,000 and things will start getting a little bit easier and with that
