This is how you build a fortune

The topic of saving has regained importance and is more than just a necessary evil. Because a certain financial cushion can provide some composure in times of crisis. Even people who save and invest 100 euros a month can build up a small fortune.

It’s worth saving again. Because since mid-2022, the European Central Bank (ECB) has successively turnaround in interest rates initiated. The goal: to counteract inflation. The key interest rate is now even at 3.5 percent. Nevertheless, the turnaround in interest rates is proceeding only slowly.

Some banks and brokers are once again offering their customers lucrative interest rates on money market and time deposit accounts. However, numerous financial service providers are still acting hesitantly. For example, many of them are still not offering their customers any returns, despite interest rate hikes. Others promise high interest rates at first, but there is usually a catch.

Turnaround in interest rates: Saving pays off again

ING Germany is currently attracting customers with an overnight interest rate of 3.0 percent. But only for the first six months. A standard interest rate of 0.8 percent then applies. Bottom line: 1.8 percent annual interest. That’s not bad, but compared to some brokers like Trade Republic or Scalable Capital, it’s average at best.

Because the interest rates at the neo-brokers are even 2.0 percent (Trade Republic) or 2.3 percent (Scalble Capital) – there, however, only for Plus subscribers. But even if your savings rate is rather low, it can add up to a considerable amount over a longer period of time.

Save 100 euros a month: That’s how much money you get in interest

In addition to the return, one thing is particularly important: staying power. Because the longer you save regularly, the higher the return. Another advantage: you will also benefit from the compound interest effect for years to come. Let’s assume an interest rate of 2.0 percent per year on a call money account with a savings period of 20 years.

If you save and invest 100 euros a month under these conditions, the total deposit over the entire period will be 24,000 euros. Including interest and compound interest, the bottom line is even a final capital of 29.157 euros. The interest is therefore 5,157 euros.

Fixed deposit account as an alternative

If you have already been able to build up reserves beforehand, a fixed-term deposit account can be an additional alternative. The advantage: The interest rates are higher than with a call money account (up to 3.5 percent). However, you have to entrust your money to a bank for a fixed period of time (up to ten years).

You cannot access the money during this period. This is different with a call money account, which is why the interest is slightly lower. If you already have reserves, a savings mix can also make sense. The advantage: Higher interest for the amount in the time deposit account and an amount that can be called up at any time in the call money account, on which there is also interest.

Save 100 euros a month: call money vs. time deposit account

An example: You have 20,000 euros in savings and invest the amount in equal parts: 10,000 euros in a fixed-term deposit account with three percent interest and 10,000 euros in a call money account with two percent interest. You also put an additional 100 euros aside in the call money account every month.

Over a period of 20 years, you will have a final capital of 62,077 euros with a total of 44,000 euros paid in. The interest payments are therefore 18,0067 euros. In detail, the calculation looks like this:

• cash account: Final capital 44,016 euros, deposit 34,000 euros, interest 10,0016 euros
• fixed deposit account: Final capital 18,061 euros, deposit 10,000 euros, interest 8,061 euros

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