The first is harder.
If you’ve made $1 million and want to go to $1 billion, chances are you have a bigger network, a more finely tuned skill set, a hunger to keep growing. This is in the event that you made that first million on your own as opposed to being a trust fund kid or getting an inheritance. The reason that it’d be easier to go from a million to a billion as opposed to a hundred to a million is that the former is something most people never do. If you’ve always lived a certain way and you never thought about pushing the boundaries, then this will all be new to you and you’ll have to first convince yourself that it is possible by proving to yourself through intense action that it is. This is never easy. The whole thing with business is that if you prove that you can quit your job and make $1000 on your own, everything else suddenly becomes so much easier. But if you’ve never made that money on your own, and you’ve always relied on a paycheck, then you’ll probably be a bit scared and hesitant to start. Similarly, if you’re just a regular guy trying to make your first million, you’ll hesitate, have doubts and just take a while to push yourself out of your comfort zone enough to make your dreams a reality.
It’s much harder to build $100 into a million dollars because living expenses eat away at your savings.
If you start with a million dollars then you have an investable nut that you don’t have to touch to pay for your living expenses. You can start compounding a return on the money you are able to set aside for investment day one.
There are also many more opportunities to make a high return on a million dollars than a hundred dollars. You can buy a business or real estate with a million dollars. You meet the minimum amount necessary to invest in hedge funds or private equity deals with a million dollars.
You also can take advantage of greater leverage if you have a million dollars. You can borrow money to buy a business, real estate or stocks and keep your million invested and compounding a return.
When you start with $100 life can get in the way of saving a lot of money. It takes tremendous discipline and hard work to make the first million.
Drew Eckhardt makes a great point about getting to a million based on salary savings. Depending on your earnings you could definitely save $1 million in five years. Maybe working more than one job. You can’t do it if you are making minimum wage but if you earn a decent salary and practice miserly spending habits you can save a million.
But you can’t save yourself to a billion—you need to invest your way there.
Asad Chishty & Paul Cohn
Read Asad Chishty’s & Paul Cohn’s answer to, “Which Is Harder to Achieve in 5 Years: Starting from $100K and Becoming a Millionaire or Starting from $1 Million to Becoming $1 Billionaire?” on Quora.