20-Year Plan: Build Wealth with 100 Euros a Month

One hundred euros. That’s less than many people spend on their smartphone plan, including the device. And yet, if invested consistently over the long term, this amount is enough to build substantial wealth. This article explains how this can work, what return scenarios are realistic, and what mistakes should be avoided.

The most common reason people don’t start investing isn’t a lack of money. It’s the belief that the effort only “really pays off” once you can invest larger sums. “I can’t make a difference with just 100 euros a month!”—this mindset prevents wealth accumulation more than any bad investment decision.

This is a fallacy, and it has a name: underestimating the power of compound interest over long periods of time. Those who start early give their money time to grow. Those who wait until they have “enough” lose the most valuable resource of all: time.

Added to this is the hurdle of getting started. Opening a brokerage account, choosing an ETF, setting up a savings plan—that sounds like a lot of effort for someone who’s never dealt with it before. The message up front: You don’t need specialized knowledge, a large fortune, or daily monitoring of the stock market. All you need is patience and, above all, a clear plan.

ETF-SparplanAufmacherbild für einen ETF-Sparplan

The Power of Compound Interest: The Most Important Tool

Imagine you put 100 euros into a standard savings account with 0% interest. After 20 years, you’ll have 24,000 euros. Exactly what you deposited—nothing more. But due to inflation, that’s significantly less purchasing power.

Now imagine that the money grows by 6% every year. In the first year, the average capital might yield 36 euros in interest. That sounds unspectacular. But that interest itself earns interest the following year. And the interest on the interest does too. This effect accelerates over time—and that’s exactly what makes the difference.

In the financial world, it is often said that compound interest is “the eighth wonder of the world”—a quote frequently attributed to Albert Einstein, for which, however, no reliable evidence can be found. The principle behind it is mathematically indisputable.

A concrete example to start with: Someone who starts investing 100 euros a month at 6% per year at age 25 will have around 46,000 euros by age 45. Someone who doesn’t start until age 35 and stops ten years later will end up with only about 16,400 euros—even though they paid in the same monthly amount. The early years are the most valuable.

What you can do with 100 euros a month

The following table shows how a monthly deposit of 100 euros grows at various annual rates of return. The calculations use the compound interest formula for regular deposits. For comparison: The total amount deposited, excluding interest, is 12,000 euros after ten years, 18,000 euros after 15 years, and 24,000 euros after 20 years.

The values were calculated using the future value of an annuity formula (FV = PMT × [((1 + r)^n − 1) / r]) with monthly compounding: PMT = 100 euros, r = annual interest rate ÷ 12, n = term in months.

What these figures mean: Assuming an annual return of 6% and a 20-year investment period, the initial investment of 24,000 euros grows to approximately 46,204 euros. Of this amount, about 22,204 euros is due solely to the effect of compound interest—that is, money that has earned more money.

The 8% scenario may seem optimistic. Historically, the MSCI World Index has achieved similar returns over long periods: From 1975 to the end of 2024, the index achieved an annual average of around 9.7% p.a. on a euro basis (net, dividends reinvested). (Source: Scalable Capital / MSCI Return Triangle). For planning purposes, however, many financial experts recommend assuming a rate of 6 to 7% per year to account for costs, taxes, and potential market downturns. Past performance is no guarantee of future results. The 4% scenario, on the other hand, is more conservative and takes into account potential cost deductions and market downturns. Statistically, the actual result will likely fall somewhere in between.

What types of investments are worth considering?

Before you get started, it’s worth taking a quick look at the main options:

• Money market accounts: Safe, but the interest rates are significantly lower in the long term than what the stock market can yield. Suitable for a rainy-day fund, but not enough on its own for long-term wealth accumulation.
• Robo-advisors: Automated investment services that invest your money according to a predetermined risk profile. Convenient and good for beginners, but usually associated with higher costs than a self-managed ETF savings plan.
• ETF savings plan: An exchange-traded index fund into which money is automatically and regularly invested. Low costs, broad diversification, easy to manage. For most beginners, the most suitable vehicle for long-term wealth accumulation.

Why an ETF savings plan is the best choice for beginners

An ETF typically tracks a stock index—such as the MSCI World, which includes approximately 1,400 to 1,700 companies from more than 20 developed countries (the exact number varies, as the index is regularly adjusted). By investing in such an ETF, you automatically diversify your capital across thousands of companies at once.

This has several advantages:

• Low costs: The ongoing costs of an ETF are often between 0.1% and 0.3% per year for popular MSCI World ETFs (e.g., from iShares, Xtrackers, or Vanguard). Actively managed funds often cost five to ten times as much.
• No single-stock risks: A company’s bankruptcy has only a minimal impact on your portfolio because you’ve invested in hundreds of other companies at the same time.
• Automated: You set up the savings plan once and hardly have to worry about it afterward.
• Transparency: You always know exactly what you’ve invested in.

Which ETF should I choose?

Two index concepts are particularly frequently discussed among German investors in savings plans:

• MSCI World: Tracks companies from developed industrialized countries. Technically speaking, the index does not include emerging markets. A large portion of the index consists of U.S. companies—the U.S. weighting currently stands at around 65 to 70% (exact figures can be found in the latest MSCI fact sheets).
• FTSE All World / MSCI ACWI: These indices go a step further and also include emerging markets, such as China, India, and Brazil. This results in even broader diversification.

None of these indices is “better” than the others—they differ in the scope of their geographic coverage and in their risk structure. Which index is a better fit for whom depends on personal risk tolerance and investment philosophy.

Vermögensaufbau-BaumVermögensaufbau-Baum

Choosing a Broker – What to Look For

A brokerage account is the account where ETF shares are held. When choosing a broker, you should consider the following points:

• Investment plan fees: Some brokers offer investment plans starting at one euro per month for free, while others charge a transaction fee per trade. For a 100-euro monthly investment plan, even a 1.50-euro fee per trade can amount to a 1.5% expense ratio—a significant factor over 20 years.
• Minimum amounts: Most modern neobrokers allow savings plans starting at just 1 or 10 euros per month. Traditional branch banks often have higher minimum thresholds.
• Deposit protection and regulation: The investment account itself—that is, the ETF shares—is protected as a special fund and is not included in the broker’s insolvency estate. Nevertheless, you should ensure the platform is regulated by BaFin or subject to European regulation.
• Product selection: Not every broker offers every ETF as a savings plan. You must therefore check in advance whether the product you wish to invest in is available through your chosen provider.

Current savings plan fees: Many German neobrokers now offer ETF savings plans free of charge. Trade Republic and Scalable Capital execute savings plans without execution fees, and Flatex also offers over 1,600 ETF savings plans free of charge (as of early 2026). It is therefore worth comparing costs before opening a securities account.

Adjusting for inflation – What will assets really be worth in 20 years?

The figures in the table above are nominal values: they show how many euros you are likely to have in your investment account in 20 years. However, they do not indicate what you can actually buy with that money.

Inflation erodes purchasing power. With an average inflation rate of 2% per year—the European Central Bank’s medium-term target—the purchasing power of 1 euro will drop to about 67 cents in 20 years.

This means: The nominal 46,204 euros (6% scenario, 20 years) have a purchasing power of around 31,094 euros in today’s prices (calculation: 46,204 € ÷ 1.02²⁰ = 46,204 euros × 0.6730).

That sounds like a harsh reality check. It is—but only when compared to the nominal value. The key point: Even if you had left the money in a money market account, it would have suffered the same loss in purchasing power. The difference is that with an ETF savings plan, you at least have a chance to beat inflation.

The return after deducting inflation is called the real return. With a 6% nominal return and 2% inflation, the exact Fisher formula [(1 + 0.06) ÷ (1 + 0.02) − 1] yields a real return of around 3.9%—which is historically considered a respectable result for individual investors.

Common beginner mistakes – and how to avoid them

• Market timing: Waiting until prices are “low” or for a predicted market crash is tempting—and almost always counterproductive. Studies show that even professional fund managers cannot reliably time the market over the long term. According to the regular SPIVA reports from S&P Dow Jones Indices, the vast majority of actively managed funds underperform their benchmark index over long periods. Those who simply let their savings plan run benefit from the cost-averaging effect: they automatically buy more shares when prices are low and fewer when they are high.
• Too frequent rebalancing: Every transaction incurs either direct fees or, at the very least, costs time and stress—and possibly even taxes. Those who rebalance after every market dip or jump on the next “hot” trend destroy long-term returns.
• False expectations: The figures in the table above assume consistent returns—reality is more volatile. In some years, you may lose 20 or 30% of your portfolio’s value. This is normal and part of the process. If you don’t factor this in, you’ll sell at the bottom.
• Forgetting your emergency fund: If you invest everything and then face an unexpected expense, you may have to sell at the worst possible moment. It’s advisable to keep a buffer of three to six months’ salary in a checking account before investing.

The Psychology of Stamina – How to Keep Going for 20 Years

Twenty years is a long time. Over that period, you’re almost certain to experience stock market crashes, weather political crises, or possibly face personal setbacks. All of this tests your discipline.

The following strategies can help:

• Automate instead of making active decisions: A standing order for your savings plan ensures that money flows in automatically—regardless of your mood, market conditions, or distractions. What doesn’t require an active decision won’t be sabotaged.
• Don’t check your portfolio daily: Monitoring prices daily increases the likelihood of making emotional mistakes. Many experienced investors only check quarterly or annually.
• Reframe price drops as buying opportunities: If the market falls 30%, your savings plan buys the same ETF shares at a 30% discount. Instead of panic, a level-headed response is the right approach.
• Keep your goal in mind: You should write down why you decided to invest—retirement planning, financial independence, a specific goal. In times of crisis, this serves as an anchor.

Taxes Explained Simply – Withholding Tax, Exemption Order, Advance Lump-Sum

In Germany, investment income from ETF savings plans is subject to withholding tax. The tax rate is currently 25%, plus a 5.5% solidarity surcharge on the tax, resulting in a total tax burden of 26.375%—excluding church tax. If church tax is applicable, the tax burden increases to approximately 27.8% to 28%, depending on the federal state (as of 2026).

• Exemption Order: Every individual has an annual savings allowance of 1,000 euros (married couples and registered partners: 2,000 euros). This amount has been in effect since 2023 and remains unchanged for 2026. Capital gains up to this amount remain tax-free. An exemption order can be issued with any German broker to ensure that no tax is withheld up to the allowance limit.
• Advance flat-rate tax: Since 2018, the advance flat-rate tax has applied to reinvesting ETFs. It ensures that a small portion of the notional capital gain is taxed annually during the holding period—even without a sale. The specific calculation depends on the base rate, which the Federal Ministry of Finance sets annually in early January based on the Bundesbank’s yield curve for federal bonds. For 2026, this base rate is 3.20%. For most small investors with an exemption order, the advance lump sum falls within the exemption limit.

TaschenrechnerBild von Steve Buissinne auf Pixabay.

Quick Checklist – 5 Steps to Your First Savings Plan

It’s all theory until you actually get started. Here are the five concrete steps:

Step 1: Assess your financial foundation
Before investing, make sure you have an emergency fund of at least three months’ worth of expenses in a checking account. High-interest debt (overdrafts, credit cards) should be paid off first before investing.

Step 2: Choose a broker and open a brokerage account
Before actually purchasing a product, you should compare the savings plan terms and conditions of several providers. With most online brokers, opening an account takes only a few minutes and is done entirely digitally, including video identification.

Step 3: Choose an ETF
You should always opt for a broadly diversified, low-cost index ETF—for example, based on the MSCI World or a comparable global equity index. A low TER and sufficient fund size (a common rule of thumb: at least 100 million euros in assets under management) are essential.

Step 4: Set up a savings plan
You should set the monthly amount (in this example, 100 euros). Next, enter the start date and set up the recurring payment. Done.

Step 5: Submit a tax exemption order
Immediately after opening the brokerage account, you should submit a tax exemption order for 1,000 euros. It takes less than two minutes and saves you from unnecessary tax deductions.