The thought of saving $1.5 million – what Americans think they need to retire comfortably – is daunting, but what if you could focus on just the first $100,000?
That’s the advice from the late Charlie Munger, famous billionaire Vice Chairman and right-hand man of Warren Buffett at Berkshire Hathaway.
“The hard part of the process for most people is the first $100,000,” Munger conceded at Berkshire Hathaway’s 1998 annual meeting. “If you have a standing start at zero, getting together $100,000 is a long struggle for most people.”
But once people achieve that milestone, they can breathe a little easier. The reason lies in compound interest, or what Albert Einstein is said to have called the “eighth wonder of the world,” finance experts said.
“It’s the miracle of compounding interest,” said Brad Clark, investment adviser representative and founder of Solomon Financial. “Once you’re past those years (of scrimping and saving), it’s incredible to see what happens.”
