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When I began my career right out of college, my income was solely derived from my job. Fast forward to my forties, and after more than twenty years of work, I now enjoy multiple streams of income<\/a>. While most of these are passive, none are particularly extraordinary.<\/p>\n However, the internet is flooded with \u201cexperts\u201d eager to teach you about passive income. The truth is, there\u2019s no secret course; it boils down to three simple steps:<\/p>\n Working backward, your initial goal should be to save your first $1,000, then $10,000, and eventually $100,000.<\/p>\n Consider this insightful quote from Charlie Munger:<\/p>\n The first $100,000 is a challenge, but you must achieve it. I don\u2019t care what sacrifices you need to make\u2014whether it\u2019s walking everywhere or only eating food bought with coupons\u2014find a way to accumulate $100,000. After that, you can ease off the gas a little.<\/em><\/p>\n<\/blockquote>\n If you don\u2019t have $100,000 in a brokerage account, your primary financial goal should be reaching that milestone. For many, $100,000 can feel like an insurmountable figure, but let\u2019s break it down into manageable steps.<\/p>\n Your first target is to save up $1,000. This requires diligent budgeting and cutting unnecessary expenses. Achieving this milestone is crucial because without $1,000 in savings, you lack an emergency fund. A minor financial setback can derail your plans for months or even years.<\/p>\n Need some inspiration? Check out this list of 105 easy ways to save money.<\/a><\/strong><\/p>\n Eliminating unnecessary expenses is vital to reaching that first $1,000, ensuring that a financial misstep doesn\u2019t set you back.<\/p>\n Once you\u2019ve reached $1,000, congratulations! Your next goal is $10,000. While this may seem daunting, it\u2019s achievable through careful budgeting and side hustles. Consider strategies like switching banks for bonuses<\/a> to earn extra cash.<\/p>\n Saving your way to $10,000 is not only possible but essential.<\/strong><\/p>\n Once you hit that mark, invest the $10,000 wisely (for guidance, check out a simple three-fund portfolio<\/a>). If you achieve an 8% return annually, that initial investment could yield $800. While $800 may not seem life-changing, the power of compounding will work wonders as your assets grow.<\/p>\n After investing your $10,000, the journey to $50,000 becomes more challenging. You\u2019ll need to focus on increasing your income, which may involve investing in yourself<\/a> or starting a side business<\/a> that has growth potential. While saving is still an option, it will be a slower process.<\/p>\n At $50,000, with an 8% return, your money could earn $4,000 annually. As your balance increases, so does your earning potential. The time it takes to add $10,000 decreases significantly as compounding takes effect.<\/p>\n This is the magic of compounding\u2014eventually, your money can earn more than you do.<\/strong> Over 30 years, a $10,000 investment could grow to $100,000 without any additional contributions. This emphasizes the importance of saving that first $10,000 and getting the compounding clock ticking as soon as possible.<\/p>\n Start by placing your savings in a high-yield savings account<\/a> to earn interest. While it may not be substantial, it\u2019s better than the negligible rates offered by traditional accounts.<\/p>\n Next, transfer your funds to a brokerage account and invest in a three-fund portfolio<\/a>:<\/p>\n These options are available through Vanguard, but you can also explore low-cost alternatives like Fidelity or Charles Schwab:<\/p>\n Once you\u2019ve invested, it\u2019s time to step back and let your money work for you.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" When I began my career right out of college, my income was solely derived from my job. Fast forward to my forties, and after more than twenty years of work, I now enjoy multiple streams of income. While most of these are passive, none are particularly extraordinary. However, the internet is flooded with \u201cexperts\u201d eager […]<\/p>\n","protected":false},"author":1,"featured_media":1723,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[40],"tags":[],"class_list":["post-1722","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured"],"_links":{"self":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts\/1722","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/comments?post=1722"}],"version-history":[{"count":0,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/posts\/1722\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/media\/1723"}],"wp:attachment":[{"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/media?parent=1722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/categories?post=1722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/igorsplayground.com\/appcheckr\/wp-json\/wp\/v2\/tags?post=1722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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Step 1: Get to $1,000 in Savings<\/h3>\n
Step 2: Get to $10,000 in Savings<\/h3>\n
Step 3: Get to $50,000 in Savings<\/h3>\n
Where Do You Put It?<\/h3>\n
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