Warren Buffet’s right-hand man at Berkshire Hathaway once revealed the ‘magic number’ you need to save to build wealth

Investment guru Charlie Munger was Warren Buffett’s right-hand man and a key figure in Berkshire Hathaway’s success.

Buffett called him the “architect” of their company and described their relationship as “part older brother, part loving father.”

So it is worth listening to his advice on financial matters – even after his death. He died in December, just before his 100th birthday, with a fortune of $2 billion.

One of Munger’s timeless tips was his take on building wealth: He said you should scrimp and save until you reach $100,000. Once you do, that amount grows quickly – all because of the effect of compound interest.

At a shareholder meeting in the late 1990s, Munger famously said, “The first $100,000 be damned, but you gotta do it.”

‘I don’t care what you have to do. If that means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get $100,000.”

This blunt statement acknowledges that reaching the milestone is not easy.

But once individuals reach that $100,000 mark, their path to greater wealth becomes easier.

That’s because compound returns can significantly grow the initial investment over time.

Simply put, compound interest is the interest you earn on interest.

Over the years, this will continue to evolve and grow at an increasingly rapid pace as you earn interest on an ever-increasing account balance

“After that you can ease off the throttle,” he said.

Although Munger’s statement was made in the mid-1990s, $100,000 then, adjusted for inflation, would be roughly equivalent to $200,000 today.

Many financial advisors today echo Munger’s sentiment, recognizing that the first $100,000 is often the most difficult and crucial step in building wealth.

The path to this amount will vary based on individual circumstances – with some needing a second job or side hustle, while others could cut back on expenses.

However, Munger’s message is clear: the journey to building wealth begins with reaching this crucial first milestone.

Do you want to retire with $1 million?

Millions of Americans could miss out on retirement savings if they don’t take advantage of the simple power of compound interest, experts warn.

Being on the right side of compound interest can help you build wealth, but the key is to take advantage as early as possible, said financial planner Georgia Lord.

Being on the right side of this phenomenon can help you build wealth, but the key is to take advantage as early as possible, says financial planner Georgia Lord.

Simply put, compound interest is the interest you earn on interest.

For example, if you invest $100 and earn 5 percent interest each year, you will have $105 at the end of the first year. This larger amount will then earn 5 percent interest, bringing your total at the end of the second year $110.25 comes.

Over the years, this will continue to evolve and increase at an increasingly rapid pace as you earn interest on an ever-increasing account balance – and could even reach a million by the time you retire.

Lord, a financial planner at Corbett Road Wealth Management, says starting early is the key to getting the most out of compound interest, no matter how much money you’ve saved.

“It’s never too late, but it’s never too little either,” she told DailyMail.com.

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