It may be trite, but it's true: on the path to wealth, nothing is quite as hard as making the first $1 million. Here are ꦐa few reasons why.

It's Hard to Get Started

One of the biggest obstacles to having $1 million in the bank is the slow rate at which people save early in life. New graduates are typically just scraping by—it's difficult enough to make rent and repay 澳洲幸运5官方开奖结果体彩网:student loans. Few people are able to save much at all, even for an 澳洲幸运5官方开奖结果体彩网:emergency fund.

But as people advance in age and experience, the picture might change. Not only do salaries rise, but people often find that they no longer have to pay so much for those star🔥ting expenses—student debts are paid down, and perhaps they have a partner with whom they can share living expenses.

Compounding Works the Fastest on Larger Sums

One of the reasons that it's so difficult to accumulate the first $1 million is because it is such a large amount of money relative to where most people begin. To go from $500,000 in assets to $1 million requires a 100% return—a level of performance very hard to achieve in less than six years. To go from $1 million to $2 million likewise requires 100% growth, but the next million after that requires only 50% growth (and then 33% and so on).

In fact, many wealthy people can and do "live off the interest." That is, they put a chunk of their fortune in a relatively safe collection of income-generating assets and live off of that—allowing them to be more adventurous with the rest. Consider that $1 million invested in a portfolio of 澳洲幸运5官方开奖结果体彩网:AAA-rated corporate bonds would produce in excess of $50,000 of interest income (pre-tax), and you can see some of the leverage of passive inᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ♓⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚcome and compound interest.

Less Wealth Means Fewer Options

In at least one key respect, the rich are different: they have access to investment options that others do not. Hedge funds, for example, are simply not accessible to most people, because they do not meet the minimum income or wealth levels established by regulators and the firms.

It is also hard to invest in "ground floor" opportunities without wealth. Start-ups and 澳洲幸运5官方开奖结果体彩网:venture capitalists want to attract millionaires and billionaires, not regular people who can invest a few thousand (or even tens of thousands) do✅llars. Similarly, it can be very difficult to invest in lucrative 🌸asset classes like farmland or timberland without a sizable amount of wealth to start.

The Bottom Line

The truth is that it's hard to build that first million dollars of wealth. But don't let that stop you from trying. Try to save as much money as possible. Invest that money with a prudent balance between risk and opportunity, and be patient. Many millionaires are made in the later stages of life, often with their own 401(k) accounts.