The 3 Major Financial Milestones (This Will Change Your Life)

22:15And so you need to realize that you need to save your way to your first 100K. Let me say it louder for the people in the back. You need to save your way to your first 100K. You cannot out-invest a low savings rate. It's just gonna take you way longer if you do have a low savings rate. And so we need to figure out, well, how do we increase our savings rate? It's again, income and cutting back, which is why we talked about the marker at$50 ,000. You really need to focus on increasing your income, building those skills that are gonna help you increase your income so that you can get to that point in time.

22:47Now, what do you need to focus on to get to your first 100K and at this milestone once you cross this milestone? Well, first, now that you've crossed the milestone, we need to make sure that we are maximizing tax advantage accounts. So the Roth IRA, the 401k, any of those are really, really important, and especially the HSA if you're eligible. Also, we want to aggressively grow our income through skills. We want to do it through career moves, maybe some side businesses, but we want to focus on growing that income so that we can really get to the next milestone, which is gonna be a big, big difference.

23:15You also wanna protect this savings rate at all costs, which is why we build the emergency fund upfront is so that if something happens in life, it doesn't derail your savings rate and throw you off track. No, instead, you have the emergency fund in place to take care of anything that is gonna happen in life and then you just follow the 136 method. If you haven't heard that episode, we will link it up down below in the show notes. It is a core tenant to what we talk about here on this podcast is the 136 method. And so you just follow back into frame with the 136 method. And then you need to also understand what you're investing in.

23:45This is the point in time where now it is very important to understand asset allocation. Sure, it's important at the other milestones as well, but now you need to know why you're investing in what you're investing in. Having your investment plan in place is very important and getting properly invested and making sure you're not sitting with any cash on hand that's supposed to be invested. So getting those dollars in these accounts and then making sure you're buying the index funds and ETFs that makes sense, that is exactly what you need to be doing or whatever else you're going to be investing in.

24:13Maybe you're a dividend stock investor. Maybe you're an individual stock investor. It just depends on what floats your boat. I personally am an index fund and ETF investor. And so this is why this is going to change everything. Now, once you cross$100 ,000, the math begins to flip. And at 10 % rate of return, if you have$100 ,000 invested, well, that's fantastic because guess what? You're going to make$10 ,000 in that given year if you 10 % rate of return. And so that's without you doing anything, which is why the math begins to flip. And so in year two, all of a sudden you have$110 ,000 if you didn't add anything else.

24:44And this means that you're making that amount of money, but also the contributions that you're putting in is growing this account as well. And you can see how this is going to begin to compound over time, where it could make a really big impact on your bottom line. So now that we've gotten through milestone two, now we're looking at our first marker. Because to get to our milestone two to milestone three, there are a few different markers that we want to hit. And this is where a lot of people become unmotivated. And I don't want this to happen to you. Okay. So after the first hundred thousand dollars, the first marker is$250 ,000 invested.

25:15Now compounding becomes a genuine contributor here. When you hit$250 ,000 invested, it's just, it's not just a footnote or something that's happening in the background. Instead, a 10 % return on$250 ,000 per year is going to end up being$25 ,000 per year. Now, some of you at this point in time may be saying, well, this guy keeps saying a 10 % rate of return. Where is he getting that from? Well, what we're talking about here is the S &P 500. Google S &P 500 historic returns, and you will see that the S &P 500 has returned slightly above 10%. Now, you can adjust down for inflation. That is completely fine.

25:51A lot of times what we teach people to do here is to increase your contributions by the rate of inflation of that given previous year so that you can still be investing the same exact buying power. And so let's Google right now, as we're talking about this, I'm gonna Google the S &P 500 historic returns at the time I'm recording this just so we can look at exactly what they've been. So this is from 1927 to 2026. Here's the returns of the S &P 500 as of the time recording this in 2026. The 100-year average is 10.42%. percent the 50-year average is 11.71 percent the 30-year average is 10.12 percent and the 10-year average is 15.62 percent that's since 2016 uh absolutely crazy after inflation if you adjust that one down it's 12.02 percent and so if you're asking well where is he getting that 10 percent rate of return from that is where i'm getting it from now if you're planning for your retirement or you're thinking through this when it comes to your retirement i actually like to even be more conservative than that.

26:50You can use an 8 % rate of return, 7 % rate of return. If you want to be really safe, you can use a 9 % rate of return, but getting more conservative when it comes to retirement planning is very helpful for most people. So this marker at$250 ,000 means you're making$25 ,000 per year at a 10 % rate of return. And you are now earning what many people earn from their job, just from your investments, or at least a big chunk of what people earn from their job, just from your investments at that 10 % rate of return. And so you want to, during this timeframe, continue growing your income, but do not ignore your investment strategy.

27:21It's very important to make sure you're continuing with your investment strategy. You wanna continue to diversify across account types. So making sure you have pre-tax, post-tax, and taxable in those different buckets. You wanna think through, well, if I am increasing my income more and more over this timeframe, maybe I want to think about adding some exposure to real estate, or maybe you want to add some exposure to some other areas. You can absolutely do that or just continue with your investing plan. and you want to protect against lifestyle creep even more at this higher income level, especially as it increases over time.

27:52Now, if you're hitting your retirement goals, some lifestyle creep is healthy. But if you're not, you want to make sure that you are focusing and growing your income during this timeframe. Now, during this marker, this is also a great time to make sure that you're continuing your education. Your financial education is one of the most important things that you are going to be doing. And as you start to see this money compound, you're going to realize I need more and more of a financial education as I get more advanced and down the line with my wealth. And so this is a good time to be thinking through that.

28:20So the next marker after 250 ,000 is probably, you guessed it,$500 ,000. Now this is a real milestone. You have invested and saved half a million dollars. This is a big, big deal. And for some of you, if you bought a house during this timeframe, you may be approaching a million dollar net worth. But we are focusing on how much you have invested because those are the real dollars that you can use when it comes to retirement. in buying your financial freedom. And so the 500 ,000 marker is gonna be a point in time where you're gonna feel like, wow, I am halfway to a million dollar portfolio. This is absolutely amazing that I have come this far.

28:57And it may feel like you've grinded or it's been a slog during this timeframe. Maybe it took you 20 years to get here, but that's okay. Because once you get to this point in time, you're gonna see how everything is going to continue to accelerate. Again,$500 ,000 with a 10 % rate of return means that your portfolio could be earning $50 ,000 every single year. That is a solid salary from portfolio growth alone for a lot of folks. And so when you think about the rule of 72 and how long it takes for this money to double, if you've got a 10 % rate of return and this money doubles every 7.2 years, well, in 7.2 years, you can anticipate that you will have a million dollar portfolio during this timeframe.

29:37And so this is where you really want to think through, well, what do I want to do next? And can I accelerate this path because that is before you even add your contributions. Once you add your contributions in, your job at this stage is to stay invested and to keep contributing. The more you can contribute during this timeframe, the faster you can accelerate your path to getting to that next milestone. So do not sabotage compounding by pulling money out for lifestyle expenses. I see way too many people saying to me, hey, can I take a 401k loan out? Or hey, should I start to take some of the money out of my Roth IRA that I contributed?

30:08Or maybe I should use my taxable brokerage account for something else. No, do not interrupt compound interest unnecessarily. You will make a mistake if you start to think this way. You need to make sure that this money that you have invested, that is untouchable. In fact, it is 500 degrees. And if you touch it, your hand's going to burn off. I don't want you to think about touching that money ever because once you start to interrupt compound interest unnecessarily, it becomes a habit and you feel like you can go back to the well and keep on dipping into that well. Never, ever, ever touch those dollars.

30:40Also, you really need to think about asset protection and start at least the estate planning basics. Having a will in place, power of attorney, those types of things are going to be very helpful as your wealth begins to grow. And also make sure you have all your beneficiary designations in place going to the right people. A portfolio this size and really any size portfolio, you want to make sure it's going to the right folks and the right people. And at this wealth level, tax strategy is going to become increasingly important, especially as your income begins to grow. If you are someone who could get this far, I assume, from when you were at the$10 ,000 or milestone one, all the way up to this marker at$500 ,000, that you have most likely grown your income over that time frame.

31:19And so because of this, and because you are someone who has focused your time and energy on growing your income, you want to make sure that tax strategy becomes a part of what you're thinking about. Now, if you're a W-2 earner, you may not yet need someone who is a tax strategist, but if you're investing in businesses or real estate or you have all these different things going on and you feel as though your tax situation is becoming complicated, this could be a time where you move on to the next step and find a CPA. All right, so that is the$500 ,000 marker. We're going to jump into the next marker right after this break.

31:49So the third marker between these two milestones is going to be$750 ,000. Now, at$750 ,000, this is where you're making some true progress. And the cool thing about this is the timeframe between when it takes to get from$500 ,000 to$750 ,000 is really going to be a lot faster than you think, especially if you are increasing your contributions over time. And all of a sudden, you see that$750 ,000 is in reach. I really want you to focus on this. In fact, let's use our calculator to see how long it would take to go from$500 ,000 to$750 ,000, because I think this is where a lot of people get surprised on how long it can actually take.

32:23So I'm going to pull this up and show you guys exactly how long this could take. Okay. So let's say, for example, you're contributing$1 ,000 every single month. Okay. And you're starting from zero and you got a 10 % annual rate of return. Well, to get to that first 500 ,000, it's going to take you 16 years and six months to get to that first 500 ,000. And as you can see, that's on marker here. But then once you get to the point in time where you're going to 750, it only is going to be 19 years and 11 months from zero to that 750. And so the cool part about this is to go from 500 to 750, it's going to take you three years and five months at$1 ,000 monthly contributions with a 10 % rate of return.

33:06All of a sudden, your money begins to compound and it begins to accelerate. You're going to make$250 ,000 in three years by literally not doing anything. And that is why we want to get our dollars invested as fast as we possibly can. And why I love this tool so much because you can go and play with the numbers and adjust the amount that you're investing and see how quickly this is going to happen. So maybe you get to the 750 ,000 level and you're saying to yourself, well, I want to figure out, you know, how long it's going to take me to get to my first million. Let me use this calculator so I can tweak and see how long it's going to take me to get there.

33:38And maybe I want to contribute, you know, an extra thousand dollars a month over the course of the next 12 months so that I can get there even faster. Well, that's an amazing way to think about this and amazing way to plan out your finances, which is why we want to give this to you so that you can utilize this going forward. Now, when you're at$750 ,000, this is going to feel like that home stretch. It's going to feel like you are so close to having a million-dollar portfolio. And again, our goal on this podcast is to create a million millionaires. So I want every single one of you to get to this point.

34:04Every person that is listening, we want you to get to this point. The key, though, is not taking your foot off the gas. You may feel as though, wow, I made it. I am here now. Really, really excited to be here. But instead, what I want you to do is focus your time and energy on accelerating, getting to that first million. Why? Because at$750 ,000 at a 10 % rate of return, your portfolio is gonna generate$75 ,000 a year in returns. And that is more than median household income in the US. So once you get to this point in time, you have the ability for your portfolio to make more than the median household income in the US.

34:39So let's say you're married and you make some money. Maybe your spouse is working as well. they make some money. Well, now all of a sudden you went from two full-time incomes to three full-time incomes because your portfolio also has a day job and it's working its butt off for you. This is the power of compound interest and why we want you to get here. I don't want you to make any major lifestyle changes to increase your fixed expenses when you get to this point in time, if you can avoid it. Now, sure, you can take your foot off the gas a little bit once we cross that million dollar mark, but I want you to focus on getting to that million dollar mark so that we can reap the benefits of some of the compound interest that we are trying to focus on here.

35:15So this is marker number three is that$750 ,000. We want to make sure that we keep going. We want to make sure that we keep pushing. Now we are getting to milestone three and milestone three is your first million dollars invested. This is not your million dollar net worth. This is the million dollars that you actually have in investments. And most of us out there, if you can get to this point in time, you can find other income sources to have the ability to know that you will be able to retire one day. You will be able to be financially free one day. Why? We're going to talk about that here in a second.

35:47But let's talk about the math to get here from$100 ,000. If you had$100 ,000 at a 10 % rate of return with no contribution, it would take you approximately 24 years without contributing another dollar to get to your first million. $100 ,000 at 10 % with$1 ,000 a month reaches$1 ,000 ,000 in approximately 15 years. and$100 ,000 at 10 % with$2 ,000 a month contribution reaches 1 million in about 12 years. This is why maximizing those contributions early and hitting your first 100K fast shortens the timeline on how long it's gonna take you to get there, which is why we wanna focus on getting to our first 100 ,000 as fast as we possibly can.

36:25But this milestone's a lot different than the others because once you cross that million dollar mark, your portfolio, if you got a 10 % rate of return, is gonna be making you six figures at that 10 % rate of return. But imagine like some years, maybe you get a 15 % rate of return. It can make you$150 ,000. At a 10 % rate of return, it's going to make you$100 ,000. There's been some years recently that the S &P 500 had 25 % rate of returns. And so you have a$250 ,000 year within your portfolio. Now, sure, the market goes down some years as well. So you're going to have to anticipate that and make sure you know that that's going to happen.

36:58But that's why the average rate of return comes right around 10 % when we think about this. Now, what does this milestone unlock? Well, number one, it unlocks the ability to think through, okay, well, at a 4 % withdrawal rate, I can now withdraw$40 ,000 per year safely for the majority of my life and still have the ability to be able to preserve most of my wealth in this portfolio. Number two is this allows you to shift your decisions. Maybe you have a million-dollar portfolio and you're working at a really toxic job. Well, you could take a little time off to go find the job that you want to go do by subsidizing some of your income with a percentage of this portfolio.

37:32And then maybe the rest of your money you can make somewhere else at a part-time job until you figure out exactly what you want to do. This gives you flexibility. This gives you options in life. And once you get here, your portfolio is going to compound without you even having to do anything. The compounding growth here is exponential. Getting from$1 million to$2 million means it's only gonna take you 7.2 years if you think about the rule of 72. Getting from 2 million to 4 million is gonna take you 7.2 years. So you can see how this money continues to compound every single year and why it is one of those areas that is so incredibly powerful.

38:07So getting to your first million is the milestone number three. And this is the final milestone that we're gonna have for most people that are trying to achieve. Sure, there's milestones after this that we could talk about getting to 2.5 million. A lot of people, a lot of folks in Master Money Academy are trying to get there. A lot of folks are trying to get to five. Some folks are trying to get to 10 million. And those are different milestones that can be hit different ways. But for a lot of people out there, you want to get to your first million so that you can cross that threshold and get to the point in time where you absolutely are changing your life.

38:36And so again, there's three milestones here. Zero to 10K, your savings rate is going to be that whole thing. Zero to 100K, your savings rate again is going to be the majority of that. And then we have 100K to 1 million. 1 million is gonna be mostly compound interest and it's going to change the way that you see your money. And from 100K to 500K, when we're thinking about some of those milestones in place, that's gonna be your savings rate plus compounding. Those are what are gonna propel you to get to some of those next levels. Let me give you a couple scenarios though, because I wanna dive into a few different scenarios and examples, because I know you guys love examples on what this would look like.

39:11Okay, so we're gonna shift our attention. I'm gonna actually share my screen with you guys on here. On the financial milestone track here, where you guys can see exactly three different scenarios of what's going to happen here. So as you can see here, this is the financial milestone track. And I want to show you guys exactly how this tool works so that you can use this. And I'm going to give you a couple of different examples. So let's use scenario A. I want you to think of scenario A as a 25-year-old person starting from zero. And they have a$0 starting balance. And we're going to use$500 per month and a 10 % rate of return.

39:41And so as you come down here, you're going to see, here's the calculator here. And we are going to go with$500 per month. They're starting from zero and a 10 % rate of return. And let's go through this scenario and see exactly what happens. Well, to get to their first$10 ,000 at$500 per month, it's going to take you one year and seven months. And so that's the quick win we're trying to get to. And at that point in time, their portfolio at a 10 % rate of return is making them about$1 ,000 per year. To get to their first $100 ,000, this is why it's such a slog. It takes them nine years and 11 months to get to their first$100 ,000 and their portfolio is going to be producing about$10 ,000 per year.

40:17To get to their first$500 ,000, it's going to take them 22 years and six months. So starting from zero, they went from$100 ,000 to$500 ,000 and it took them about 13, just under 13 years to get to that point in time. And it takes them 28 years and 11 months to get to their first million. The key takeaway though is to start early with a modest contribution and it still gets to a million before traditional retirement age. Because if they bumped this up, for example, and let's say that this same exact person had$1 ,000, you would see that this would shift to 22 years and six months is how long it would take them to get to their first million.

40:54And then beyond that, it's going to compound even faster. Now let's do scenario B. Scenario B is a 35-year-old playing catch-up. They're trying to get to hitting these milestones as fast as they possibly can with a 10 % rate of return. And we're going to have a starting balance of$10 ,000. We're going to look at$1 ,500 per month with that 10 % rate of return. So let's have a starting balance at$10 ,000. Then what we're gonna do is we are going to invest$1 ,500 per month. And when we look at this, if they start at$10 ,000 at$1 ,500 per month, it's gonna take them two years to get to$50 ,000. It's gonna take them three years and 11 months to get to$100 ,000.

41:33And it's only gonna take them 18 years and five months. That starting balance is very important for them to get to their first million. So if you feel as though you're 35 years old and you're starting too late, it's not too late. You can see how playing catch up can really get you to a point in time that changes your life. Let's talk through the high earner. Maybe we have a high earner who starts too late and they want to make sure that they actually get on track to be able to do this. Well, this high earner who starts too late, let's say they start with a$25 ,000 starting balance and they are contributing$3 ,000 per month.

42:06Let's see exactly where they're going to land when we do this. Well, at$3 ,000 per month, they would obviously get to their first$100 ,000 in one year and 10 months. And so that seems like, oh man, that's a slog. That's a grind. But they would get to their first million in 12 years and nine months. It would take them eight years and one month to get to their first 500 ,000 and only 10 years to get to their first 750. But because they're contributing so much, they can play catch up and increase the amount of money to get to this point in time. Contributions matter more than almost anything else early on.

42:38And because they have at least a little starting balance there. It is never too late to get started. This is why I tell you guys, it is never, ever too late to get started. If you just get the ball rolling, you can absolutely transform your life that quickly, as long as you increase your income. If you got the income in place and you've got the delta in place, you can get to your first million in 12 years and nine months, what,$3 ,000 per month. And so this is why this tool is so important. It helps you track through all this stuff so that you know exactly what is going on. All right, so before we wrap this episode up, I wanna go through the biggest mistakes at each of these milestones that people make, just so you know some of the things to avoid.

43:12So number one, between 10 ,000 and 50 ,000, I want you to try to avoid lifestyle inflation as much as possible. Lifestyle inflation will derail your progress because your savings rate is so important during this timeframe. That is the one thing that I think you really need to understand is that do not let your lifestyle inflate until you get to at least, at least some of these other milestones. At 50 ,000 to 100 ,000, sitting in cash is one of the most important things that you do not want to do. I see way too many people sit in cash because they think the market is scary. No, you need to get your dollars invested.

43:43This entire exercise to show you that getting your dollars invested is gonna help you more than anything else in this life. From 100 ,000 to 250 ,000, under-investing because you finally feel comfortable. A lot of people will take their foot off the gas and they will stop contributing as much as they should. I want you to make sure you avoid that at all possible. I see this happen time and time again. And instead, I don't want you to have this false sense of security. People slow down contributions because life starts to happen. and said, I want you to put your foot on the gas. At$250 ,000 to$500 ,000, a lot of people avoid thinking through tax strategy at this level.

44:15And so I want you to think through tax strategy, how you can save more in taxes so that you can take those extra dollars and put them towards wealth building so you can buy your freedom back. And then lastly, from 500 to 1 million, pulling money out for lifestyle purchases is the number one thing I see. People are like, man, I got this nest egg already in place. I can start to pull this out to buy a house or I can start to pull this out to buy a car or I can take a 401k loan to start this business. No, I don't want you interrupting compound interest unnecessarily. Instead, we need to make sure that we are focusing on the task at hand, which is building wealth.

44:45So really excited for each and every single one of you to get started focusing on these milestones. These are our milestones that we want you to focus on and then going beyond there to 5 million to 10 million or whatever else your financial goals are. For some of you, though, you just want to get to that first million and then decide where you need to be there from there. And I think that is a great goal to have in place. Listen, if you want direct help from me and you want to be a part of a community of people who are all working towards these milestones, I would love to invite you to join Master Money Academy.

45:14Master Money Academy is the place that will transform your financial life, where you're going to go from someone who feels stressed out, anxious about money, you don't know where to put your next dollar, to the person who knows exactly where that next dollar needs to go. they have financial clarity and they know exactly how to hit these milestones. They have an investment plan in place. They're tracking their retirement number and they know exactly what they need to do next. Master Money Academy is where we walk you through that. And we help hundreds of people every single week inside Master Money Academy.

45:43And if you ever get stuck, we have a step-by-step framework that shows you exactly what to do with your next dollar. And when you get stuck, you can ask me on our weekly live coaching calls that we do every single week. I'm helping people every single week in Master Money Academy on those coaching calls. In fact, the Master Money Academy members got a copy of this calculator before any podcast listeners did. We test a lot of this stuff out with them. And so you get access to all kinds of different perks that most people don't get who just listen to the show. So I would love to invite you to join Master Money Academy.

46:14And if you know, I don't want to invite you to join Master Money Academy without seeing what's behind the curtain. So I'm going to give podcast listeners a seven day free trial so you can test it out for seven days, see if it's right for you and behind the curtain. And that's the best way to see if Master Money Academy is gonna work for you. So click the link down below in the show notes for that seven day free trial. Join Master Money Academy, join one of our weekly coaching calls, have a conversation with me live on those calls so that you can see if Master Money Academy is for you. Can't wait to meet you inside and really appreciate each and every single one of you listening to this podcast episode.

46:45If you got value out of this episode, leave a five-star rating and review on Apple Podcasts or Spotify. It truly means the world to us. And if you're watching on YouTube, Spotify, or Apple Podcasts, make sure you're subscribed to get some of the future content that we have coming up. Thank you so much for being here. We will see you on the next episode.