Social Media Means
Photo by Julia Larson Pexels Logo Photo: Julia Larson

How hard is it to make $1000000?

Even for those highly disciplined few who can save $10,000 or $15,000 a year, that would take over 66 years to build $1 million with no interest or compounding.

investopedia.com - Why The First $1 Million Is The Hardest - Investopedia
What should I study for social media marketing?
What should I study for social media marketing?

Top 12 Social Media Skills Excellent Communication. The first social media skill you must have is - communication. ... Creativity. One of the most...

Read More »
Last updated Sep 4, 2018
Is Snapchat still popular 2022?
Is Snapchat still popular 2022?

How many users does Snapchat have? In 2022, Snapchat will have 493.7 million users worldwide, placing it fourth-largest among the Big Five social...

Read More »
Last updated Aug 6, 2018

Existing in the shadowy world between trope and meme is the notion that on the path to wealth, nothing is quite as hard as making the first $1 million. While it may be a phrase repeated in jest by people who think building even $1 million in wealth is unthinkable or impossible, there are actually a lot of interesting reasons that this saying is true. Moreover, the more people understand about the difficulties that go into building the first $1 million, the better their odds of surmounting these obstacles and achieving that worthy goal. Key Takeaways There are now more than 11 million millionaires in the United States.  These individuals have amassed more than $1 million in net wealth.

These individuals have amassed more than $1 million in net wealth. Wealthy people often quip that earning their first million was the hardest. Why is this the case?

Having money makes it easier to make more money, through investment, ability to take risks, and opportunities that reveal themselves.

The Difference Between Wealth and Income

For starters, it is very important to distinguish between making a million dollars and having a million dollars. While having an accumulated net wealth of over $1 million is an attainable goal for most people, only a very select few will ever earn that much in a single year. Moreover, "earning" a million-dollar paycheck may not leave someone as rich as commonly thought—recent history abounds with examples of athletes, entertainers, businessmen, and lottery winners squandering their money by throwing away unthinkable amounts of money on frivolities. It is also worth noting that there are many "million-dollar earners" who do not actually earn $1 million. Someone may own a business that brings $1 million in revenue, but has to pay most of that out in expenses. Likewise, owning a million-dollar piece of property secured by $2 million in debt is not really being a millionaire.

Hard to Get Started

One of the biggest obstacles to having $1 million in the bank is the slow rate at which people save early in life. While some jobs do offer starting salaries in excess of $60,000, they are the exception. More often, new graduates are scraping by to pay the rent, repay student loans, and still put together enough to have some semblance of a life. Even for those highly disciplined few who can save $10,000 or $15,000 a year, that would take over 66 years to build $1 million with no interest or compounding. But as people advance in age and experience, the picture changes. Not only do people typically see their salaries rise, but they often find that they no longer have to pay so much for those "starting expenses"—student debts are paid down, they have the furniture they need, and perhaps they have a romantic partner with whom they can share living expenses.

What is a fun team building activity?
What is a fun team building activity?

Scavenger Hunt Split everyone into groups and make a list of fun things to find or do outside your office. Make it each team's mission to find and...

Read More »
Last updated Feb 8, 2020
What happens if you don't use social media?
What happens if you don't use social media?

While the effects of quitting social media are generally positive in the long run, your immediate reaction may be one of stress and anxiety. These...

Read More »
Last updated Oct 23, 2019

The Power of Compounding

One of the reasons that the first $1 million is so hard is that it is such a large amount of money relative to where most people begin. To go from $500,000 in assets to $1 million requires a 100% return—a level of performance very hard to achieve in less than six years. To go from $1 million to $2 million likewise requires 100% growth, but the next million after that requires only 50% growth (and then 33% and so on). In fact, many wealthy people can and do "live off the interest." That is, they put a chunk of their fortune in a relatively safe collection of income-generating assets and live off of that—allowing them to be more adventurous with the rest. Consider that $1 million invested in a portfolio of AAA-rated corporate bonds would produce in excess of $50,000 of interest income (pre-tax), and you can see some of the leverage of passive income and compound interest.

Extra Wealth Means Extra Options

In at least one key respect, the rich are different; they have access to investment options that regular people do not. Hedge funds are simply not accessible to most people because they do not meet the minimum income or wealth levels established by regulators (to say nothing of the minimums that individual firms/funds impose). It is also hard to invest in "ground floor" opportunities without wealth. Start-ups and venture capitalists want to attract millionaires and billionaires, not regular people who can invest a few thousand (or even tens of thousands) dollars. Similarly, it can be very difficult to invest in lucrative asset classes like farmland or timberland without a sizable amount of wealth to start.

Risk Aversion: Easy to Risk a Lot When You Have a Lot

How can I make money on Instagram without selling anything?
How can I make money on Instagram without selling anything?

There are several popular activities that can make you money on Instagram without having a product to sell: Publish Sponsored Posts. Become a Brand...

Read More »
Last updated Feb 8, 2019
What are examples of scheduling tools?
What are examples of scheduling tools?

Scheduling tools and techniques GANTT Chart. This is a horizontal bar chart plotted over time (e.g. days, weeks or months). ... Schedule Network...

Read More »
Last updated Dec 17, 2021

Risk aversion is another under-appreciated obstacle to accumulating and building wealth. When many people are first starting to save and invest, they zealously guard that grubstake against risk for fear of losing it all. Although it is understandable, the fact remains that the ties between risk and reward are hard to break. Though investors may rightly fear the relatively small risk of "losing it all," playing it safe means that they are earning lower returns and making it all the more difficult to build towards that first million. A portfolio of bonds and conservative stocks may outpace inflation, but it will make the road to $1 million very long indeed. Conversely, once people have enough wealth that they feel comfortable and not particularly vulnerable to an economic downturn or bear market, they often take bigger risks. Not all wealthy people invest this way (Warren Buffett being a famous example of a wealthy and very conservative investor), but many do.

The Bottom Line

There is no point in minimizing the fact that it is hard to build that first million dollars of wealth. But just because something is difficult is no reason not to try. Try to save as much money as possible, invest that money with a prudent balance between risk and opportunity, and be on a never-ending hunt for ways to work better, smarter, and harder. After all, the rewards are there to be won and figuring out how to make the second million dollars is a problem that is certainly worth having.

investopedia.com - Why The First $1 Million Is The Hardest - Investopedia
What is the best paid PDF reader?
What is the best paid PDF reader?

Find out more about how we test. Adobe Acrobat DC is the best PDF editor and reader. (opens in new tab)Whether you're reading. editing, converting,...

Read More »
Last updated Jul 8, 2022
How hard is it to become a sports agent?
How hard is it to become a sports agent?

Becoming a sports agent takes plenty of hard work and dedication. First and foremost, if you plan to be a sports agent, you'll definitely need to...

Read More »
Last updated Sep 15, 2018
What are 10 positive effects of social media?
What are 10 positive effects of social media?

The Positive Effects of Social Media Building Relationships and Staying Connected. Social media can make it easy to find groups of like-minded...

Read More »
Last updated Oct 8, 2022
Is it better to get views or likes on TikTok?
Is it better to get views or likes on TikTok?

No matter what reason you have for using TikTok, one thing remains true: the more views you get, the better engagement. Of course, some people have...

Read More »
Last updated Jan 10, 2018