Personally the one that always stuck with me was what an older and successful investor told me.. it went something like this-
"The first million is the hardest. The second million is hard too, but you have some help from the first one and have learnt a few tricks along the way. By the time you're working on your third million your only thought is how easy it is..."
I was ruminating more on the nature of compounding and timelines, and I really like the idea of subdiving the journey into "thirds". Take the case of
- typical person saving for retirement throughout a working career of 35 years
- saves £x per month, and can increase it by 2%/yr in real terms
- investment vehicle returns 7%/yr real
Of your final pot you build after 35 years:
the first 1/3 of it took 61% of your working career (21.1 years) to achieve. Goddangit, that fresh faced graduate is now a burnt-out mid-40s mid career stalwart with a rapidly expanding waistline and rapidly receeding hairline.
The middle 1/3 takes a further 24% of your career (8.4yrs) to achieve. All the money you have built up is slowly building up a head of steam and working away, so that the 2nd third is considerably easier to achieve. Still, 8.4years is still 2 full olympiads plus change, and you're acutely aware that you have far more years behind you than you still have ahead, so a bit early to be breaking out the bubbly.
The final 1/3 is the endgame. To go from 2/3 to 3/3 takes just the final 15% of the career (5.25yrs).That's over 4 times quicker than it took to build the first third! Your money is compounding so quickly for you now that it makes your head spin how the nominal numbers are changing as much in a month as they did in a year or more at the start.
