How to Make Your First $100,000 in Your 20s

If I were in my 20s, here’s exactly how I’d make my first $100,000. I’m Tyler, a former financial advisor and portfolio manager, and I create financial content for free to help you with your financial journey.

1. Commit to a Savings Rate

The number one thing I’d do is commit to a savings rate. For me, I would start with 5% of each paycheck.

2. Choose a Roth IRA

Now we need to decide where that 5% goes. I’d choose a Roth IRA. I can always take back the contributions anytime, penalty and tax-free, and it can grow tax-free for decades with significant tax advantages.

3. Use a Money Market Fund

Next, I’d make sure that my default account in that Roth IRA was a money market fund. This way, as I researched where to invest my money, it wouldn't just sit there earning zero.

4. Invest in Growth

After that, I’d invest that money in something projected to grow at almost double that rate. For me, that would be an S&P 500 index fund that historically returns 7% post-inflation.

5. Increase Contributions Annually

Finally, each year I would revisit step one and do my best to increase my contributions by 1% of my paycheck to turbocharge the growth. This would also give me the opportunity to consider if I actually needed any of that money in the short term and should therefore withdraw it from the Roth.

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