Is the first million the hardest?

I got absolutely no clue at all because I am far from it and my set plan also does not concern reaching one million euro in stocks. My original plan is 750,000 € but I have come to realise that I need even less than that.

It is however interesting that so many says that the first million is the hardest to make. Where does it come from and how does that apply to me?

When I take a look at my own situation then I see two borders. The first border is to reach a yearly amount of dividend payment that is as large as my monthly savings because from this point on the snowball will roll with more than double speed.

The second border to reach is to receive more dividends than what one actually have in living expenses which then also gives the option to decide what is next in life for me? Some obviously decide to collect more money and others retire early.

Both borders are highly individual and the more extreme monthly saving the quicker the second border will be reached. The rule as well as reality says that saving 70% of your salary for seven years and you can retire with remained standard of living.

When I look at my own yearly dividend payments then I am at around 2.5% of the invested value due to for instance being shareholder in companies that pay no dividends as well as pushing in new fresh money each month. Many companies in Europe pay dividends once per year so there can be as much as twelve months from investment to first dividend payment.

Taking the one million as an example then that would give around 25,000 € in dividends per year and I guess that for many people, living a very comfortable life, then 25,000 € per year will most likely cover their expenses hence this could be part of the reason for the saying. Because after this point, with remained expenses, you will only keep gathering wealth.

If I then look at myself then happily I will not need one million. I have as a rule to invest minimum 1,000 € per month which means that my big snowball effect would start already at 480,000 € and this value I think is fairly similar for a normal investor. Lundaluppen as an example was up at this level of his portfolio and he was getting out around 16,000 € in dividends so even more than the 12,000 € that he was roughly saving each year. In my opinion most people with an ok job and without an extremely expensive lifestyle are able to push 12,000 € into stocks each year.

The second border, which is based on expenses, will be more different for each investor. Happily my expenses are even lower than 15,000 € per year which means that I will need around 600,000 € to go past the second border. By now 66,000 € was accomplished in three years and I therefore got 534,000 € to go.

For me, due to my low expenses, the biggest hurdle will be the first one and once that is accomplished then the home run have already been hit and I will need to go through a massive mental change to be able to take out money from the broker account in comparison to always pushing in money depending on what I decide to do in life.

Conclusion: It could be that the first million will be the hardest to collect for many investors but I, personally, do not care. I need 600,000 € in stocks paying out around 15,000 € in dividends each year and anything more than that would be useless to me and to the world since hoarding more money helps no one. One day I hope to go back to this article, or to be reminded from readers regarding this article, to remind myself how I thought today and to hopefully then also be able to influence how I think in the future. Maybe one then wants to leave a legacy behind for the children or have decided to start a foundation or anything else which could be the reason to keep increasing the wealth. Maybe one is happy with how ones life is going with a interesting job, with nice colleagues and have absolutely no interest to retire or waste money on stupid stuff so hoarding is the only option left... who knows...

Which are your two borders? Are you already past them? Are you now working on your legacy?