Teaching my kids – Part 4: The first € 100,000 is the toughest

I will be writing some post to try to educate my kids. I know they are still very young (4 and 7) but it is never too early to start. And the can read these blog posts later on in life 😉 (This is probably the case, because they don’t speak or read English very well at this moment – You got to love an understatement!).

Everybody knows Warren Buffett. It is said that he is the greatest investor in the world. And I won’t argue with that. He is an inspiration for me and many DGI’s. Just by reading his yearly letters to the shareholders of Berkshire Hathaway, you can learn a lot about investing and the strategy of Mr. Buffett.

Every strong man has a strong partner. So is also the case for Mr. Buffett. His business partner and his right hand is Charlie Munger. He once said: The first € 100,000 is the toughest. Once you cross that threshold, doors begin to open up fairly quickly and the snowball that we call compounding starts to work its magic in a meaningful way.

Everybody who wants to be rich, just need to start saving. It’s like the Chinese verb: Every journey starts with the first small step.

The first € 100.00 will be tough, but you just have to do it. It doesn’t matter how you do it. After you have build an investment portfolio of € 100,000, the rest will go much easier.

And of course this is really hard, you want to live and enjoy life. Go out with friends, have a good time. This is why most people do not succeed to build a portfolio of € 100,000. This because most people spend more than the save of invest. A personal loan or a credit card has become normal nowadays. But my advice is: start saving/investing today. Give your snowball time to grow. The sooner you start the better.

In Part 3 I told you about compound interest and the magic of it. So lets see what € 100,000 can do.

If we invest the original € 100,000 and get an annual return of say 6%, your interest in the first year will be € 6,000. After five years, with the magic of compound interest, your € 100,000 is worth € 133,823!! And after 20 years € 320,714

Wow what a numbers. And a return of 6% is not very hard as a DGI.

But to reach your first €100,000, you have to scrape/save every penny. Make offers (E.g. using your bike instead of your car), life frugal (but still enjoy life ;-)) and make the right decisions. But once you are there, it is become a part of your life. It will not be very hard to continue saving/investing. So keep donating fresh capital to your portfolio/fund. And reinvest the dividends.

And then your snowball will be rolling even harder! And within 20 years you will be able to life of your dividend. How cool is that!

I know how hard it is to reach your first € 100,000. Sometimes you have to make tough decisions. And give up things. But always reminder to enjoy life! From my own experience I know it is hard sometimes. But it will all be worth it! I’m sure. I’m more than half way of reaching my first € 100,000. So I know what I’m talking about. Keep saving and investing! That’s the message I want to teach my kids.

This is my fourth blog about teaching my kids. I hope my kids at the age of say 18 have all the financial knowledge I have right now. This would be a huge advantage for them! And that’s why I started these blog post series.

Did or do you teach your kids about the first € 100,000? How did you do it?



12 thoughts on “Teaching my kids – Part 4: The first € 100,000 is the toughest

  1. DivGuy

    Did you start teaching them that lesson already or planning to do so eventually?

    Sure is an important lesson that will make their life easier when they get older!


  2. DividendNL

    Just opened up a account for my two kids (11@12 years). They like so search (in their ways) for well known companies like Coca Cola, Nike,Starbucks etc. They start small but hey, they got time!

  3. Team CF

    We have started a Meesman account for our little one. There won’t be a €100,000 in there for her to get started, but certainly enough to get going and pay for education/travel/personal development, whatever she want to do with it. Would love her to keep it invested (and grow it) of course, but it will be her decision by that time. We may add another account if she wants to start investing as well, lets first start with the basis: how to handle money.

    1. Dividend for Starters

      Well done! This is what I recommended my brother as well. He has a little daughter and wants to do *something* for her, but he doesn’t know where to start. Meesman is easy to manage. Great job, giving your kid a head start.

  4. Dividend for Starters

    Hey Pollie,

    You’re doing a great job so far as well!

    I don’t have any children yet, but if I look at my nephews, their parents struggle with the financial future of their kids.
    For example, what if your daughter wants to be a teacher with a take away income of €1600? Saving 50, 40 or even 30% of that will be challenging. Reaching the first €100k could take up to 15~20 years at a slow rate. Obviously, this is not a problem, but it could lead to motivational issues if your plan is to reach the €100k ASAP, as that is the hardest part of the journey.

    Bottomline: the basics are more important than the amount 🙂

    I’m not even at 20% of the €100k, but I hope to reach it within 7 years.

    Best wishes, DfS

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