Warren Buffett: Why $100k is the MAGIC Number to Getting Rich (Life Changing Advice)

listen closely because I'm about to let you in on the secret to getting rich if you just clicked on this video it's fair to say that you want to One Day become a millionaire but what if I told you that the hardest part of becoming a millionaire isn't hitting the elusive $1 million Mark the hardest part is actually getting to your first $100,000 as you're about to see once you hit this magical number a lot of the hard work has already been done but please don't take my word for it this is coming from legendary investor Warren Buffett and let's just say our friend Warren here knows a thing or two about getting rich make sure to stick around till the very end of this video because I have a special treat for you guys that I know you'll like okay let's get into the video if I were to ask someone what the single most powerful tool in the world is when it comes to getting rich what do you think they would say a few things that come to mind may include having a high-paying job being able to pick winning stocks or even heck coming from a family well all of these things are important they pale in comparison to the single most powerful force when it comes to getting incredibly Rich that force is what is referred to as compound interest truly understanding and utilizing the power of compound interest can mean the difference between becoming incredibly wealthy or living paycheck to paycheck your entire life you are about to see exactly why in this video Buffett has been known to say that compound interest is the eighth wonder of the world he who understands it earns it he who doesn't pays it listen to Buffett talk about how compound interest built his fortune the allowance when I was a little boy was a nickel a week but I like the idea of having a little more than a nickel a week to work with and I went into business very early I started selling Coca-Cola door to door I sold gum door to door sold Saturday in post Liberty magazine Ladies Home Journal you name it I think I enjoyed the game almost right from the start but I like being My Own Boss that's one thing I like about delivering papers I got arrang the route I wanted nobody was bothering me at five or 6 in the [Music] morning I was delivering 500 papers a day and I made a penny of paper but in terms of compounding that Penny Shir into something else [Music] Einstein has reputed have said that compound interest is the eighth wonder of the world or something like that and it goes back to that story you probably learned when you were in grade school where somebody did something for the king and the King said what can I do for you and he said well let's take a chess board and put one kernel of wheat on the first square and then doubl it on the second and doubled it on the third and the king readily agreed to it and by the time he figured out what two to the 64th amounted to he was giving away the entire Kingdom so it's a pretty simple concept but over time it accomplishes extraordinary things once you hit the $100,000 Mark the wonders of compound interest start to work their magic to demonstrate just how powerful compound interest can be here's a quick story for you meet the characters in our story William and Richard nearly everything about William and Richard is the exact same both are the same age work in the same field and even make the exact same amount of money however there is one big difference between these two guys this difference may seem inconsequential at first but as you're about to see the seemingly small detail is going to make all the difference that difference between William and Richard has to do with how quickly each one is able to hit that important $100,000 Milestone our friend William here is by all accounts a great guy he works really hard and is able to successfully progress in his career however there is one problem William never saw this video so he doesn't understand the importance of getting to your first 100,000 because of this when it comes to money William kind of Coes through life because William is progressing in his career and makes decent money he eventually is able to hit the $100,000 Mark at the age of 45 if we assume William never saves another dollar and is able to generate a 10% return by the time time he is 70 he will have a portfolio worth nearly $1. 1 million not bad at all on the other hand we have Richard fortunately for Richard he watched this video when he was just in his early 20s which as a side note make sure to hit that subscribe button because it's my goal to help you build wealth by studying the world's greatest investors it is completely free and goes a long way in providing you guys with entertaining informative content at no cost to you with that out of the way let's get back to the story Richard got extremely focused on hitting that $100,000 number as quickly as possible his hard work paid off and he was able to achieve the $100,000 Milestone at 30 years old a full 15 years before his friend William just like William let's also assume Richard never saves another dollar and is able to generate a 10% annual return how much money do you think Richard will have when he turn 70 obviously given the fact Richard hit that Milestone 15 years years before William we all know he'll have more money however it is the magnitude of just how much more money Richard has that is shocking maybe Richard has $200,000 more maybe 500,000 okay maybe 1 million if you want to get really extreme with your guess not even close Richard has a staggering over $4. 5 Million by the time he hit 70 a whopping 3.

5 million more than William notice how the only difference between these two guys guys is that Richard got to the $100,000 Mark faster this is the beauty of compound interest with compound interest your money works for you you don't work for your money notice how Richard didn't save a single additional dollar once he hit the 100,000 Mark as you can see here 98% of the $4. 5 million portfolio Richard was able to accumulate came from investment gains put another way 98% of Richard's wealth came from his money working for him instead of him working for his money so now that we understand why the $100,000 Mark is so important when it comes to Building Wealth I want to spend the rest of this video talking about what you can do to get to your first or next $100,000 practical advice from the early life of legendary investor Warren Buffett the tangible steps you are about to hear come from the days when Warren Buffett himself was scraping and crawling to the 100,000 Milestone this money was the seed Capital that is now grown in to Buffett's current fortune that sits at a staggering $134 billion as of the making of this video This goes without saying but in order to invest money you first have to save money well this may seem like an obvious statement this simple fact seems to get lost on many people the amount of money that you can save and invest in any given period of time is simply the difference between your income or how much you make and your expenses how much you spend you should view yourself like a business a business's goal is to make as large of a profit as possible they do this by trying to maximize Revenue while also minimizing expenses you can apply the same framework to your own personal financial situation increase your income while also simultaneously maintaining or even reducing your expenses let's focus the remainder of this video on the income side of the equation by the age of 21 Warren Buffett had already managed to save nearly $20,000 and considering this was 1951 $20,000 would be the equivalent of over $240,000 today quite the impressive accomplishment by a younger Buffet there are three lessons from waren Buffett that you can begin applying today to increase your income and help you get to the $100,000 Milestone before we get into the list I want to make good on my promise from earlier in the video in order to really build wealth you have to be continually learning as Buffett's business partner Charlie Munger used to say a big part of success is going to bed a little bit smarter than when you woke up the best way to do that is to read great books that is why to thank you for supporting the channel I wanted to provide you with a list of books Warren Buffett has recommended these books are ones that Buffett has said have changed his life and have been very impactful for him and Warren Buffett has read tens of thousands of books so you know when he recommends something it is the real deal you can download this list completely for free at the link in the description of this video or in the pin comment now let's get into the list the first lesson from Buffett is to find an additional source of income in his younger years Buffett was the king of side hustles before side hustles were even a thing Buffett's favorite book growing up was 1,000 ways to make $1,000 which taught him the value of compound interest and inspired him to pursue a wide range of entrepreneurial Endeavors one of Buffett's most let's just say creative Ventures involved fishing golf balls out of a pond at a local golf course and reselling them as I'm sure you can imagine this activity was very much frowned upon by the owner of the golf course as a result Buffett and his partner in this Venture often had to Source their inventory under the cover of Darkness the only problem with this business model was that it took a decent amount of work Buffett not really a fan of physical labor wanted something a little more passive this leads us into one of Buffett's most lucrative side hustles growing up a pinball machine business Buffett and one of his childhood friends would buy an old Bren pinball machine for pennies on the dollar Buffett's friend would fix it up while Buffett would go around to local barber shops looking for somewhere to place the pinball machine Buffett's pitch was simple let us put this pinball machine in your barber shop and we'll split the profits the business quickly became a winner and Buffett and his partner soon had a fleet of pinball machines all throughout town after just a year Buffett ended up selling the business for $1,000 or the equivalent of over $116,000 in today's money not too bad for a high school student while pinball machines aren't really a thing anymore the lesson remains find a way to supplement how much money you can invest with an additional source of income this simple action will turbocharge how quickly you can hit that $100,000 Mark the second lesson from Buffett is to work a job where your pay is tied to your performance let me explain what this means Buffett's first job was working at his grandfather's grocery store Buffett would work 12-hour days for $2 in total pay put another way Buffett made about 16 cents per hour at his job a young Buffett realized that even if he worked 60 70 80 hours a week this job would simply not be able to provide him with the money that he would need to get rich Warren had to find a job where his pay was tied to his performance not simply the number of hours he worked for young Warren Buffett that meant working a paper route Buffett's paper route was commission based meaning he got paid a small percentage of the price of the newspaper for every paper he delivered this incentivized Buffett to get creative in order to maximize his earnings designing the most efficient routes so he could cover a larger territory and deliver more papers thus increasing how much he earned additionally Buffet got paid even more when customers upgraded their subscriptions to include magazines Buffett would work diligently to convince his customers to upgrade so he could make more money over time Warren started making 10 times more delivering papers than working at the grocery store while only working a fraction of the hours this this is the beauty of working a job where pay is based on performance in the year 2024 paper routes aren't necessarily something you should be doing however jobs such as sales can pay extremely well for top performers even general managers of stores can make well into the six figures if they're able to meet performance goals and receive their bonuses the third lesson for Moren Buffett on how to boost your income is to work in a career where you have a mo note this may sound a little strange at first but let me explain typically a mo is used when talking about investing the term comes from the waterfill Moes that surround medieval castles and acted as a barrier of protection in investing a mode is a business's ability to maintain a competitive advantage over its competition this Advantage allows the company to be much more profitable than the competition additionally amote helps the company maintain that profitability well into the future believe it or not the concept of OTE can also be applied to a person's career ideally you want to work in a career where you're going to be able to make a lot of money not only right now but also well into the future in order to do that you must be working in a career where you have a durable competitive Advantage here's a framework to help identify careers that may potentially have a moat picture of on diagram with three circles what you do well what you love to do and finally what is paid very well at the intersection of these three circles lies a career where you will have an advantage over the competition and thus will be highly compensated for it for Warren Buffett in his younger years this looked like working as a research analist for the hedge fund managed by his mentor Ben Graham as we can see this job checked all the boxes for Buffett when it came to researching stocks Warren Buffett was extremely talented in fact Buffett was the first and only student in Ben Grahams classic Columbia business school to ever receive an A+ Buffett also truly loved researching stocks it was something that he started doing when he was just 11 years old and finally this job paid extremely well hedge funds receive a percentage of the profits they are able to generate on behalf of investors as I'm sure you can imagine this can be extremely lucrative if the hedge fund is able to generate substantial profits given that this job met these three criteria it should be no surprise it made Warren Buffett a lot of money after only working for Ben Graham for 3 years Buffet's net worth had skyrocketed to $140,000 approximately $1.