Compound Give every euro a job
Give every euro a job before you give it a risk. Stocks are only for money that can sit through a 30–40% drop without you needing it.
Before deciding what to invest in, decide what each euro is for. Money has three different jobs, and each job needs a different home.
- Runway: your living costs until your next reliable income, or a few months of costs if you're employed. It needs instant access and zero risk, so it lives in a Tagesgeld (instant-access savings) account.
- Planned spends: anything you know is coming in the next couple of years, like a trip, a course, a move or a car. Tagesgeld, or Festgeld (a fixed-term deposit) for money you're sure you won't touch for 12–24 months.
- Long term: money you won't need for at least five years. Only this bucket goes into broad, diversified ETFs.
A worked example
Say you have €60,000 in savings, spend €2,500 a month, and want a year of runway because your job situation is uncertain. Runway is €2,500 × 12 = €30,000. You also have about €8,000 of planned spends. That leaves €22,000 of long-term money. Use the sliders above to plug in your own numbers.
All at once, or over time?
Historically, investing a lump sum all at once has beaten spreading it out more often than not, simply because markets rise more often than they fall. But for a beginner, the bigger risk is panic-selling after a drop right after you bought. Spreading the long-term bucket over 6–12 months of fixed instalments costs a little expected return and buys a lot of calm. The key is to set the schedule in advance and not change it because of the news.
Why it matters in Germany
- A current account at a big bank often pays close to nothing. Instant-access accounts at many banks and brokers paid around 2–3% in 2026, so moving the runway can earn real money at zero risk.
- Bank deposits in the EU are protected up to €100,000 per person per bank. Above that, spread cash across banks.
- Set up a Freistellungsauftrag at the bank where the interest lands, so the first €1,000 of investment income a year (€2,000 for couples) isn't taxed.
Education, not financial advice.
The crash that hit jobs and stocks at the same time
The S&P 500 hit a record on 9 October 2007. Over the next 17 months it lost more than half its value, bottoming in March 2009. At the same time US unemployment climbed toward 10%.
That combination is the trap. People who lost their jobs and had no cash cushion had to sell stocks near the bottom to pay rent, locking in the loss for good. People with a year of savings in the bank could leave their investments alone. By March 2013 the S&P 500 was back at a new record high, and the patient ones had recovered everything.
Why shouldn't next year's living costs go into an ETF, even if stocks usually go up?
Because 'usually' isn't 'every year'. A 30–40% drop can happen in any single year, and if you need that money then, you'd be forced to sell at the bottom and lock in the loss. Money you need within a few years belongs in cash.