Here’s what we have on deck today:

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📗 Read: The Number Number That Made Me Race to My First 100K

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🎙️ Listen: Why You Should Negotiate Every Bill With Nicole Lapin (

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WHY YOUR PORTFOLIOS “CVR Number” Is Important

One of the most important lessons I want new investors to learn is that the first $100k is the hardest. In fact, your first million is the hardest. The reason for this is that you need to understand your portfolio's CVR number.

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What the heck is a CVR number?

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CVR stands for Contributions Versus Returns. It is a metric that I came up with to track my portfolios progress.

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Contributions vs Returns = Percentage of Contributions/Percentage of Returns​
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You see, at the beginning of building any portfolio, your contributions are going to be the main driver of its growth. But over time, as compound interest starts to work its magic, your returns will become the major factor. This is the nature of compound interest, and why it is such a beautiful thing.

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So, for new investors, it's crucial to learn patience, especially in the beginning. It may feel like you are going nowhere with your portfolio, when in reality, this is the process you have to follow to build wealth. The CVR number will guide you and show you the progress you are making.

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We have an episode coming up that will utilize the above chart and discuss why your first million dollars is the hardest.

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As you can see in the chart, your CVR adjusts every single year. Based on contributing $1000 per year at an 8% rate of return, in year one you have a 88/12 CVR. This means that 88% of your portfolio's returns came from your contributions, and 12% of your portfolio's returns came from compound interest.

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As time goes on, this begins to level out.

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In this example, your returns do not outweigh your contributions until year 11. Eleven years is a long time to wait, especially in investing terms.

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Once your returns start to outweigh your contributions, that's when you make real progress. That's why your first million is the hardest because once you hit your first million dollars, there is a massive difference. Let me show you why.
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Once you hit your first million dollars, 13% of your returns come from your contributions, and 87% (rounded up) of your portfolio comes from your returns.

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The lesson here is to be patient. It gets better with time.

Today’s newsletter is brought to you by INDEX FUND PRO ​

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👍 Money Finds

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Rethinking Work Amid Declining Net Worth 📉💼

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​Financial Samurai delves into the dilemma of continuing to work when experiencing a decline in net worth. Insights on Reading Efficiently 📚👀

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​Rob Henderson shares his personal techniques for reading efficiently. This has been one that I read over and over whenever I don’t feel like reading.

📊Chart Of The Week

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It fascinates me how Olympic athletes are paid. Most U.S. athletes make their living off of endorsements as they are only paid about $37,000 if they win gold.

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🎉 DEALS Finds THIS WEEK

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💳If you spend a lot in your business, the Capital One Venture X Business is offering 150,000 points for a 30K spend in the first 3 months.
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✈️ Chase is currently offering a deal where you can earn 10% back on your purchase of Southwest Airlines tickets, provided you spend at least $50, with a maximum cashback of $40. This promotion is valid for a single use and does not apply to Southwest Vacations, fees, or in-flight purchases. It's a great opportunity to save on flight costs. If you're considering this offer, it might be worth checking if it can also be applied to gift card purchases.

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​Tao of Charlie Munger: A Compilation of Quotes from Berkshire Hathaway's Vice Chairman on Life, Business, and the Pursuit of Wealth With Co​

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📘 Why I Read So Much

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I loved this process Naval.

I try to read a book per week. Sometimes I get it done and some weeks I don’t. It took some time but I’ve come to peace with the weeks I don’t accomplish this goal.

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Reading for me isn’t to achieve the goal of finishing a book. Instead, I think of it in the same way Naval uses books. To ignite a fire in your mind.

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That’s what reading does. It opens you up to new ideas and new ways of thinking, and best of all provides you with the knowledge to have more confidence in life.

​My Advisor Told Me to Get Out of My Low-Cost Index Funds- Money Q&A​

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​My Advisor Told Me to Get Out Why You Should Negotiate Every Bill With Nicole Lapin (PFP VAULT)​

Youtube

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​My Advisor Told Me to Get Out of My Low-Cost Index Funds- Money Q&A​

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