When first starting your journey to six figures, it can seem very intimidating. But today I’ll be sharing 6 steps to take to reach your first $100,000 in investments! This milestone is the hardest to reach, but it gets easier as soon as you reach it! Step #1: Connect To be able to commit to […]
When first starting your journey to six figures, it can seem very intimidating. But today I’ll be sharing 6 steps to take to reach your first $100,000 in investments! This milestone is the hardest to reach, but it gets easier as soon as you reach it!
Step #1: Connect
To be able to commit to your goal, it helps to connect deeply with the reason you want to achieve this milestone. You have to have a strong “why” when it comes to a goal that requires commitment in order to stay committed and working towards it.
If you can, dive deep into your reason and think about what reaching this goal will mean to you.
Step #2: Review
To start, you should review your finances and see where you really stand. Take some time to figure out where your starting point will be. What are your expenses? How much income do you usually have to allocate? Is there a surplus once expenses are paid? Know your numbers and what you have to play with.
It’s totally normal for people to underestimate what they’re actually spending, so taking a closer look at where your money is going could be a real wakeup call. Once you know what your average surplus is, you can move on to the next step.
No surplus? No problem. Your first action step is to reduce spending, increase income, or a mix of both! Don’t be afraid of making big changes to achieve this, this is temporary while you work to increase your earning potential.
A good way of seeing how long it will take you to reach your financial goal is online calculators! I like this one from SmartAsset. A majority of your growth will come from your own deposits for a while, but you’ll see that eventually the growth/interest will start to increase. This calculator actually shows a year-by-year breakdown of just how much your account will grow and where your growth is occurring!
After seeing these numbers, ask yourself how you feel. Do you need to make some changes in order to reach your goal in a more timely manner?
Step #4: Accounts
Up next, it’s time to pick your accounts that you’ll use to invest! Personally, I recommend a brokerage account as well as a ROTH, IRA, or a 401k. This way, you can max out your ROTH deposits each month at $500, then invest any left over into your brokerage account. With a ROTH, you are allowed to take out deposits at any time with no penalty. However, any earnings must stay in the account until you are 59 ½.
Brokerage accounts work best for any pre-retirement goals, as you can take money out at any time. You will be required to pay tax on any gains.
Step #5: Invest
Now it’s time to choose your investments! My personal strategy for this includes putting 80% into index funds and 20% into stocks to add growth potential. You could always use a roboadvisor to keep things simple!
Step #6: Consistency
When it comes down to it, the important thing to remember is to deposit money regularly and put it into the right investments.
Work to increase what you can add to your accounts to speed up the process of reaching your $100,000 goal! The sooner you get there, the easier it becomes to grow your wealth. You have money working for you!