Charlie Munger, The Vice-Chairman of Berkshire Hathaway, once famously said ‘the first 100k is a b**ch’. For those trying to reach this investing or saving milestone, it’s very hard to disagree. But why exactly is getting from 0 to 100k so much more difficult than getting from 100k to 200k?

Saving or investing your first 100k is very difficult as at this stage in your financial life, you have very little money in the market earning you more money via compounding. Moving from 1million to 1.1million is comparatively easy as you have 1 million earning you returns each day.

So if the first 100k is as hard to save as it seems, what steps can we take to make this period easier and get us started on an exciting wealth-building journey over time?

Why saving and investing your first 100k is the most difficult

There are two main reasons why saving or investing the first 100k is the most difficult.

The first reason is pretty intuitive. Generally speaking, our savings increase as we age so it’s logical that we’re most likely to have 0 savings whilst still young.

For most people who are leaving school, it’s rare to be able to earn a lot of money either through formal employment or entrepreneurial ventures which means there is little money available to be saved.

When it comes to saving and investing, creating as large of a surplus as possible between your total income and total expenses is crucial. This surplus can then be saved or invested as required.

At the start of our careers, we typically have low annual income and whilst our expenses are often low too at this age, it is difficult to develop much of a surplus. Because of this, it becomes a real struggle to contribute meaningful amounts to our savings or investment accounts.

For a period of time, many are stuck in a paycheck to paycheck cycle where they earn an income from their job and then spend close to 100% of it on their various costs of living.

The second reason is less intuitive but even more impactful – compounding. When you have £1million invested, it’s easy to increase by 100k because you would already have £1million pounds earning a return on investment each year.

However, when starting from 0, you have very little money in the market earning a return and can’t fully benefit from the powers of compounding.

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How can I save/invest my first 100k faster?

In order to save your first 100k faster, you will need to increase your surplus between income and expenses. This can be done either by earning more income or by reducing your expenses. The savings rate % (total savings / total income) should be a key metric for those looking to save money fast.

Let’s look at these options in turn:

For most people, reducing your expenses will be the easiest and fastest way to increase your surplus. Most of us have a fair amount of fat on our monthly budgets that can be trimmed. Whilst this is by no means an exhaustive list, consider decreasing monthly expenses by doing the following:

  • Renogitating your rent
  • Remortgaging your house
  • Search around for cheaper deals on your bills (wifi, mobile phone etc)
  • Leasing a cheaper vehicle (or not leasing at all if it can be avoided)
  • Using your car less and using public transport / walking more to save on fuel costs
  • Cancel unused subscriptions (audible, kindle, netflix, amazon prime etc)
  • Eat our at restaurants or get takeaways less frequently
  • Drink less – alcohol costs, particularly at bars, add up amazingly quickly
  • If employed, see if you can work from home more often to reduce transport and lunch costs

Whilst reducing your expenses is the easiest way to increase your surplus, it’s not the most effective way as there will always be a floor to how low your expenses can go before you feel deprived.

The most effective way is to increase your income.

Let’s imagine you had an income of £30,000 and expenses of £25,000 per year – this would give you a surplus of £5,000 to save. Sure, you could cut your expenses by another few thousand to increase it or, you could find a way to be promoted at work to earn £45,000 a year which would make a much more significant impact.

Here are my ideas for increasing your income:

  1. Take the necassary steps to be promoted at work (Hint: the more responsibility/accountability you take on, the faster you are promoted)
  2. Perform well at work to earn annual salary increases and bonuses at the top level
  3. Maximise your pension contributions to take full advantage of your employer’s match
  4. Consider a part-time job to supplment your income e.g. coach a football team or babysit in your area some evenings
  5. Start a side-hustle project or business in your evenings and weekends

Long story short, the more you can earn and the more you can cut your expenses, the faster you will be able to save 100k.

To speed up the process further, make sure your saved money is invested in income-producing assets like stocks. At this age, you are most able to invest in higher-risk asset classes (such as stocks). If you’re not sure how – read my guide on getting started investing with Vanguard.

How do I invest my first £1,000?

The best option for investing your first £1,000 is a low-cost, index fund on an online platform like Vanguard Investor. Whilst each individual will have different goals and risk tolerances, this is a good investing starting point that exposes investors to a reasonable level of risk.

When it comes to saving and investing your first £100,000, the first step is investing your first £1,000 and establishing strong investing habits early.

As discussed above, investing in the stock market via low-cost index funds will allow you to benefit from compounding and reach the 100k milestone much quicker than you otherwise would be able to.

With this in mind, establishing the investing habit early with your first investable cash is a good idea. For UK residents, simply set up an online vanguard account, invest in a broad global index fund and then automate future investing by setting up a monthly direct debit with however much you can afford.

How long should it take to save £100k?

How long it takes to save £100k will depend heavily on your income and your savings rate (total savings / total income). The larger your income and the larger your savings rate %, the faster you will be able to save money and the faster you will reach the 100k milestone.

Obviously, somebody earning £75,000 per year is much more capable of saving up to the £100,000 milestone than somebody earning £25,000 per year. However, total income isn’t the only important factor here.

The person earning £75,000 will not be able to save and invest anything if their expenses are equally as high.

To highlight the importance of investing your money as you save rather than leaving it in a bank account, consider the following example.

Both person A and person B are able to save £20,000 per year, having commanded a good income and achieved a good savings rate %.

Person A leaves their money in a bank account with a tiny associated interest rate, as a result, it takes around 5 years to save up to the £100,000 landmark.

Person B, on the other hand, invests their £20k by putting £1,666 (20k / 12 months) into an index fund at the end of each month.

Unlike person A, who took close to 5 years to save 100k, it would take person B just over 4 years to accumulate the same amount. This should underscore the power of investing when it comes to reaching your savings targets.

Why does it become easier to save and invest more money over time?

It becomes easier to save and invest more money over time as most people are able to earn more money as they age. Due to compounding, the more money you have invested, the greater the value of the returns you are able to earn and can therefore grow your wealth at a faster rate.

The impact of the snowball effect shouldn’t be underestimated – as you invest more money you are able to earn more returns, which in turn gets added to your investment account and so on.

10% returns on a £10,000 investment will give you just £1,000 whereas the same level of returns on a £500,000 investment account is £50,000 in returns.

A similar principle is in play with dividends. If you get paid a dividend of 50p per share, clearly how many shares you own will be instrumental in your dividend payout. This dividend can then be reinvested in more shares and the snowball effect continues.

Should I invest more as my salary increases over time?

You should be investing more as your salary increases. The key to this is avoiding ‘lifestyle creep’ whereby as your salary increases, your expenses increase at the same rate. If you keep your expenses stable, your surplus between income and expenses will increase which will allow you to invest more.

There are a few factors that are crucial when it comes to investing success – how early you start investing, what you are investing in, avoiding the urge to sell during lows and so on.

What may make the biggest difference though is the value of the contributions you are able to make to your investing account. While young, you may only be able to contribute a small amount each month.

However, as your salary increases over time, you should be in a better position to contribute more to your investment account providing you can avoid the urge to increase your annual expenses in line with the increase in your salary.

How long does it take most people to reach £100k in savings?

Whilst highly dependent on your level of income and expenses, it’s entirely possible to reach 100k in savings by age 30 or even before. This will of course depend on your ability to earn a good income and maintain a moderate level of expenses.

It’s also worth noting that £100k in the UK or $100k in the US in savings can have very different impacts depending on where you live. Somebody living in London or New York with 100k in savings is in a worse position relative to their purchasing power than somebody with £50k in savings living somewhere with a lower cost of living like parts of eastern Europe or South America.

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How long will it take to go from £100k to £1 million net worth?

You can go from 100k invested assets to 1 million over a period of around 25 years assuming 10% returns and no further contributions. With annual contributions of £10k, this can be cut down to around 17 years. The S&P 500 has averaged around 10% returns historically so this isn’t an unreasonable assumption.

This time lag between 100k and 1 million in invested assets should give those pursuing financial independence a lot of confidence. For young people managing to earn a good salary and maintaining a half-decent savings rate, it’s possible to have £100k invested by age 30.

With contributions of less than £1,000 per month from then on, these people could be millionaires before they’re 50 and able to retire much younger than the standard retirement age.


As always, please remember I am an Accountant, but not your Accountant. In this post (and all of my others) I share information and oftentimes give anecdotes about what has worked well for me. However, I do not know your personal financial situation and so do not offer individual financial advice. If you are unsure of a particular financial subject, please hire a qualified financial advisor to guide you.

This article has been written by Luke Girling, ACA – a qualified Accountant and personal finance enthusiast in the UK. Please visit my About page for more information. To verify my ACA credentials – please search for my name at the ICAEW member finder. Please comment below or contact me here to get in touch with questions or ideas for future posts.