How much money can I build with an ETF savings plan?

It depends on three factors: savings rate, investment horizon, and return. With EUR 200 monthly, 7% return, and a 20-year horizon, you end up with approximately EUR 104,000 -- from only EUR 48,000 in contributions. The longer the period, the stronger the compound interest effect. Over 30 years, the same example grows to over EUR 243,000. Use our calculator to compute your individual situation.

What return is realistic for ETFs?

Broadly diversified equity ETFs (e.g., MSCI World) have historically achieved an average return of 7-8% per year, before costs and inflation. After deducting the TER (typically 0.10-0.50%) and inflation (approx. 2%), a real return of about 4-5% remains. However, there are no guarantees: in individual years, returns can range from -40% to +40%. What matters is the long-term average over at least 10-15 years.

What is the advance lump sum tax and how is it calculated?

The advance lump sum (Vorabpauschale) is an annual prepaid tax on unrealized ETF gains that has applied in Germany since 2018. It is calculated as: Base return = Fund value at start of year x base interest rate (2025: 2.29%) x 0.7. The advance lump sum is capped at the actual gain for the year. The partial exemption (30% for equity funds) is deducted, then the tax-free allowance (EUR 1,000 / EUR 2,000). Capital gains tax of 25% plus solidarity surcharge applies to the remaining amount.

How does partial tax exemption work for ETFs?

Partial tax exemption exempts a portion of ETF returns from taxation: 30% for equity funds (at least 51% stock share), 15% for mixed funds (25-50% stock share), 0% for other funds. An equity fund ETF with EUR 1,000 in gains is thus taxed on only EUR 700. At 25% capital gains tax plus 5.5% solidarity surcharge, this results in an effective tax burden of approximately 18.5% instead of 26.4%. The partial exemption applies both to the advance lump sum and upon sale.

How long will my ETF wealth last with monthly withdrawals?

It depends on the ratio between withdrawal rate and return. With EUR 200,000 capital, EUR 1,000 monthly withdrawal, and 4% return (after TER), the wealth lasts approximately 25 years. The classic 4% rule states: If you withdraw a maximum of 4% of your capital annually, you can maintain your wealth with high probability over 30 years. Important: Inflation increases withdrawal needs over time -- our calculator accounts for this.

What is compound interest and why is it so important?

Compound interest means your gains themselves generate gains. At 7% return, your capital roughly doubles every 10 years. But the effect accelerates: in the first 10 years, EUR 200/month grows to about EUR 35,000. In the second 10 years, another EUR 69,000 is added -- even though you contribute the same amount. After 30 years, the total is EUR 243,000, of which EUR 171,000 is pure capital gains. This shows: time is the most important factor in investing.

How do fund costs (TER) affect long-term returns?

The TER (Total Expense Ratio) is deducted annually from fund assets and acts as a return killer through the compound interest effect. With EUR 200/month over 30 years: At 0.2% TER, you reach approximately EUR 234,000, but at 0.5% TER only about EUR 222,000 -- a difference of EUR 12,000. At 1.5% TER (typical for active funds), the result drops to about EUR 190,000. This is why financial experts recommend low-cost index ETFs with a TER below 0.3%.

Should I invest monthly or as a lump sum?

Statistically, a lump sum investment achieves higher returns because the money works in the market longer (in about 66% of cases, lump sum beats regular investing). But: a monthly savings plan offers the cost-averaging effect -- you buy more shares when prices are low and fewer when high. For most investors, the savings plan is the better choice because: a) most people don't have large capital for a lump sum, b) a savings plan is psychologically easier to maintain, c) timing risk is reduced.

How are ETF gains taxed in Germany?

ETF gains in Germany are subject to capital gains tax: 25% Abgeltungssteuer plus 5.5% solidarity surcharge (effectively 26.375%). With church tax obligation, the capital gains tax is slightly reduced (formula: 25% / (1 + church tax rate)), but church tax is added on top. Tax-free allowance: EUR 1,000 per person (EUR 2,000 for married couples). Important: The partial exemption reduces taxable returns (30% for equity funds). Additionally, the annual advance lump sum tax (Vorabpauschale) is levied on unrealized gains.

What is a safe withdrawal rate?

The most well-known rule of thumb is the 4% rule from the Trinity Study (1998): If you withdraw a maximum of 4% of your initial portfolio value (inflation-adjusted) annually, historically you would have had capital remaining after 30 years in 95% of cases. For a portfolio of EUR 500,000, that would be EUR 20,000 per year or EUR 1,667 monthly. However: the study is based on US data. For Europe, many experts recommend a more conservative rate of 3-3.5%. Our calculator shows you exactly how long your capital lasts at different withdrawal rates.

Compound Interest Effect: Why Starting Early Makes Such a Difference | ETF Savings Plan Calculator

<h2>Compound Interest: The Most Powerful Force in the Universe?</h2>

<p>Albert Einstein supposedly called compound interest the "eighth wonder of the world." Whether he actually said it is debatable -- the statement is true regardless. The compound interest effect is every investor's most important ally. It ensures that money grows exponentially: Your gains generate gains, which generate more gains. The longer this process runs, the stronger it becomes.</p>

<h2>Why a 10-Year Difference Changes Everything</h2>

<p>Imagine two investors: Anna starts saving EUR 200 monthly at age 25. Ben starts at 35, also EUR 200 monthly. Both achieve 7% returns and stop at 65.</p>

<p>Anna (40 years of saving): approximately EUR 528,000 final wealth from EUR 96,000 in contributions. Ben (30 years of saving): approximately EUR 243,000 final wealth from EUR 72,000 in contributions. Anna invested only EUR 24,000 more than Ben but has more than double the wealth. The additional 10 years produce a EUR 285,000 difference -- that's the power of compound interest.</p>

<h2>The Rule of 72: Doubling at a Glance</h2>

<p>A practical rule of thumb: Divide 72 by your expected return, and you get the approximate doubling time for your capital. At 7% return: 72 / 7 = approximately 10.3 years. This means: Every 10 years, your invested capital roughly doubles. At 4%, it takes 18 years; at 10%, only 7.2 years.</p>

<p>This simple calculation shows why even small return differences matter enormously over the long term -- and why starting early is so decisive.</p>

<h2>Compound Interest in an ETF Savings Plan Concretely</h2>

<p>With a monthly savings plan of EUR 200 and 7% return, growth distributes as follows: After 10 years: EUR 35,000 (gains: EUR 11,000). After 20 years: EUR 104,000 (gains: EUR 56,000). After 30 years: EUR 243,000 (gains: EUR 171,000). After 40 years: EUR 528,000 (gains: EUR 432,000).</p>

<p>In the last 10 years (years 31-40) alone, EUR 285,000 is added -- even though you only contributed EUR 24,000 in those 10 years. The remaining EUR 261,000 is pure compound interest. This illustrates why every year counts.</p>

<h2>Why Accumulating ETFs Maximize Compound Interest</h2>

<p>With accumulating ETFs (marked "Acc" or "C" in the name), dividends are automatically reinvested in the fund. This has two advantages: Compound interest works immediately, without you having to manually reinvest. And you save the transaction costs of reinvestment. With distributing ETFs ("Dist" or "D"), you must reinvest dividends yourself -- or they flow into consumption instead of back into the savings plan.</p>

<h2>Starting Early Beats a High Savings Rate</h2>

<p>A surprising result: Someone who saves EUR 100 monthly for 20 years (7% return) ends up with EUR 52,000. Someone who starts 10 years later must save EUR 250 monthly to reach a similar amount -- even though they save for only 10 fewer years. Starting early is therefore more valuable than a high savings rate.</p>

<h2>Compound Interest Compared: Savings Plan vs. Savings Account</h2>

<p>The difference between compound interest in the stock market and in a savings account is dramatic. Take EUR 200 monthly over 30 years: At 7% return (ETF savings plan): EUR 243,000. At 2% interest (savings account): EUR 99,000. At 0.5% interest (current savings rate): EUR 76,000. At 0% (checking account): EUR 72,000. The ETF savings plan thus delivers 3.4 times the savings account result -- despite all the fluctuations in between. That's the price you pay for fear of market volatility: over EUR 170,000 in foregone wealth building.</p>

<h2>What Happens If You Pause for a Year?</h2>

<p>Even pauses are costly: If you're saving EUR 200 monthly at 7% return and pause for one year after 15 years, then continue, you'll have approximately EUR 226,000 after 30 years instead of EUR 243,000 -- a loss of EUR 17,000 from just 12 months of pausing. Why so much? Because the missing EUR 2,400 in contributions plus the lost gains on those contributions over the remaining 14 years are absent. That's why the rule is: Better to temporarily reduce your savings rate than to stop completely.</p>

<h2>Compound Interest and Inflation</h2>

<p>Of course, compound interest also works with inflation -- unfortunately against you. At 2.5% annual inflation, prices double in approximately 29 years (72 / 2.5 = 28.8). This means: EUR 1,000 will only have the purchasing power of approximately EUR 477 in 30 years. That's why it's so important that your return significantly exceeds inflation. At 7% return and 2.5% inflation, a real return of approximately 4.4% remains -- and real compound interest still works powerfully for you.</p>

<h2>Practical Tips: Start Now</h2>

<p>The best time to start an ETF savings plan was 20 years ago. The second best time is today. Here are concrete steps: Open a brokerage account with a neobroker (often free). Choose a broadly diversified ETF (e.g., MSCI World or FTSE All-World). Set up a standing order for your savings plan -- even if it's only EUR 25. Increase the savings rate as soon as your income grows. And the most important tip: Don't constantly check your portfolio. Compound interest needs time to work its magic.</p>

<p>Calculate your personal compound interest result with our <a href="/en/etf-savings-plan-calculator">ETF Savings Plan Calculator</a>.</p>