Charlie Munger Thinks This Is The Single Hardest Part Of Building Wealth
Charlie Munger, the Vice Chairman of Berkshire Hathaway and one of the most successful investors of our time, has compared building wealth to rolling a snowball. Yes, a snowball!
Munger also emphasizes the importance of rolling the snowball for a long time. This means that once a person has started accumulating wealth, they should continue to do so for a long time, ideally for their entire life. Munger believes that the longer a person rolls their snowball, the bigger it gets, and the more significant their wealth becomes.
What is the most challenging part of building that wealth snowball?
According to Munger, accumulating the first $100,000 from a standing start, without seed money, is the most challenging part of building wealth. This is because it requires a lot of effort and hard work, and it can take a long time to achieve this milestone.
Once a person has accumulated their first $100,000, the next significant obstacle is reaching the first million. Munger believes that to achieve this goal, one must consistently underspend their income. While there are also other money moves that you can make to help you accumulate wealth, underspending is key.
This means spending less than what they earn and saving the difference. To achieve this, Munger recommends starting early and on top of a long hill. This way, a person has enough time to accumulate wealth and benefit from the power of compounding.
In addition to starting early, underspending, and rolling the snowball for a long time, Munger suggests that living a long life can also be beneficial for accumulating wealth. This is because the longer a person lives, the more time they have to accumulate wealth, and the more opportunities they have to benefit from the power of compounding.
Lastly, when it comes to building wealth, remember this Charlie Munger quote, “The big money is not in the buying and selling. But in the waiting.” It can be very difficult to be patient, but patience pays off, friends.