Which business can start with 1500000

Investing 100,000 euros: seven mistakes you should avoid

Lana Iliev, April 30th, 2021

€ 100,000 is a proud sum - but if you want to protect it from inflation, the amount must be invested sensibly. Such a large sum gives investors access to various asset classes. Due to the many possibilities, however, it is often not easy to make the right decision.

You should avoid these 7 mistakes in order to invest your € 100,000 optimally


  1. Paying off outstanding debts too late

  2. Do not create a buffer

  3. Ignore future earnings

  4. Invest without a strategic plan

  5. Put everything on one horse

  6. Everyone needs a home

  7. Consider the investment to be a sure-fire success

1 | Paying off outstanding debts too late

Open consumer loans are poison for any financial investment. Because the loan interest is usually expensive and difficult to cover by the return on an investment. Often it is not possible to achieve a return that corresponds to the interest rate on consumer credit. In addition, the investment would have to make regular distributions in order to be able to service the monthly loan installments.

So the following applies: Pay off your consumer debt first!

Check if early repayment of your loan is possible. Often the lender demands compensation, the so-called early repayment penalty. However, this is usually less than the interest you would still pay in total. This will save you money despite the compensation you have to pay.

Early repayment of a loan is not always worthwhile. For building loans taken out privately, for example, very high compensation payments are often due, so that early loan repayment is not possible without losses.

2 | Do not create a buffer

Once the debts have been paid off, a buffer must be created. A broken car or a new laptop - sometimes surprisingly larger purchases are necessary. If you have not put anything aside in such a case, you will have to use the money invested - but that does not necessarily fit your investment strategy. For example, if you have invested money in stocks and your washing machine gives up during a stock market low, then that is more than annoying.

Always create a buffer of two to three monthly salaries and park this in a higher-interest overnight money account.

3 | Ignore future earnings

In addition to any debts and your personal buffer, you should definitely consider your future income before investing the full € 100,000. The more secure and regular your income, the longer you can forego your capital and thus rely on long-term investments. If your financial future is uncertain, perhaps because you want to change your job, you should invest in the short term - you may need part of your € 100,000 soon.

Either way: always consider your entire financial situation.

4 | Invest without a strategic plan

Make a detailed plan for your € 100,000.

  • Which investment horizon is the best for you?
  • What is your investment objective?
  • What kind of return should your investment yield?
  • How is your willingness to take risks?

You can read here how to develop a personal investment strategy that is optimally tailored to your needs: Investing money


Don't be afraid to take your wealth planning into your own hands! Because only you know what is best for your future and which investment is the right one.

Don't blindly rely on tips to give you one Bank advisor because they often only have their own commission in mind and not the best for your financial future.

If you feel that you are overwhelmed, take advantage of (good) fee advice. You pay a fee advisor yourself and not the providers of various financial products through a commission. Nevertheless, think carefully about your personal preferences in advance of the consultation - because no consultant in the world can tell you about them.

Long-term vs. short-term investment

Remember that fluctuations in value are better balanced out the longer you invest. Investing in stocks, funds and ETFs is therefore often only worthwhile if you can do without your money for a long period of time.

However, if it is clear from the start that you will need your money within the next five years, you can rely on short-term investments that are not exposed to major fluctuations in value or are covered by deposit protection, such as overnight deposits or fixed-term deposits.

Even a long-term investment should be switched to a short-term one if it becomes apparent that you will soon need the invested assets.

Investment objective: how much return do you need?

If you know your investment horizon and have a fixed investment goal, it is easy to find out how much return you need for your € 100,000. Always pay attention to the compound interest effect! In the following you can see what can become of 100,000 €:



Return p.a.



after 5 years



after 15 years



after 30 years


1,0 %

105.101,00 €

116.096,90 €

134.785,89 €

3,0 %

115.927,41 €

155.796,74 €

242.726,23 €

5,0 %

127.628,16 €

207.892,83 €

432.194,25 €

7,0 %

140.255,17 €

275.903,13 €

761.225,41 €


Source: The sums were calculated with the FAZ return calculator

Willingness to take risks: Too much can be fatal - too little too!

The more risk-taker the investor, the more attractive the return - and the greater the risk of loss. But: if you don't take any risks, you can only lose. Because low interest rates and the consideration of inflation quickly turn into a loss from supposedly safe investments.

So the following applies: Do not take risks that you cannot bear financially. But don't be too fearful and don't just rely on safe investments. Because if the return is too weak, it no longer compensates for the loss of purchasing power of your money and then you have won nothing.

Inflation weakens your returns!

If the return you get on your € 100,000 is less than the rate of inflation, then the real value of your wealth is dwindling faster than you can increase it.

5 | Put everything on one horse


€ 100,000 should never be invested in a single asset class - unless you are a millionaire.

A detailed structuring of the assets and the distribution of the capital to different asset classes protects you against a total loss through risk diversification. For example, if your stocks are losing money, they may be offset by real estate investment gains.

A balanced portfolio takes your risk preferences into account and enables you to achieve the highest possible return within this framework.

How you distribute € 100,000 among various investments depends on how much risk you are or can be willing to take.

Portfolio structuring


safety-oriented

balanced

return-oriented

Savings accounts


(Daily / fixed deposit)
50 % 30 % 10 %

Bonds with


high credit rating
10 % 10 % 10 %

Real Estate (Open


Real estate funds)
10 % 10 % 10 %

property


(Equity crowdfunding)
15 % 25 % 35 %
Stocks (ETFs) 15 % 25 % 35 %

This illustration is only an example to clarify the principle. The choice of asset classes and the distribution of wealth should always be based on individual preferences. If necessary, it is advisable to consult a financial advisor.

6 | Everyone needs a home

€ 100,000 is enough equity for one Mortgage lending and can make the dream of owning your own home come true. But you should ask yourself very carefully whether your own house or condominium is really a suitable investment.

First, remember that you are dealing with a mortgage indebted for decades. Ask yourself honestly: Can you lift such a loan over the entire term? You should also find out about the possible costs that a property generates over time. These must be dealt with in addition to the installment repayments. If your house needs a new roof, for example quickly some 10,000 € due. These and other maintenance costs are forgotten or simply underestimated by many homebuyers.

Ultimately, you should be aware that when you buy a home, you are putting all of your capital into a single property. With that you have no risk diversification and no income is generated either.

Alternatives to owning a home

Real estate belongs in every larger portfolio. In addition to the direct purchase of a property, there are also other ways to invest in real estate and sometimes achieve high returns.

Real estate funds

A real estate fund gives private investors the opportunity to invest in the real estate market with relatively small minimum investment sums. A fund manager manages the invested money and makes investment decisions. On the one hand, investors can rely on the expertise of the manager and, on the other hand, they can spread risks even with little money invested. In the case of open-ended real estate funds, investors with a return between 2.0% and 2.5% calculate. The return on risky closed-end real estate funds is between 3.5% and 4.0%.


High costs and fees kill returns!

The more you pay to a fund manager, bank advisor or broker, the less you have left of your € 100,000. Therefore, pay particular attention to custody and fund fees!

Real estate crowdinvesting

With real estate crowdinvesting, private investors can invest in real estate projects with even lower minimum investment sums (from € 10). Investors personally select projects into which their capital will flow on an online platform.

On BERGFÜRST, the platform for digital real estate investments, get investors between 5.0% and 7.0% interest p.a. on investments with short to medium terms. There are no costs for investors. There are no custody, management or administration costs, such as those incurred with real estate funds, on BERGFÜRST. You can find out more about real estate crowdinvesting under the following link and receive it when you register first investment of € 10 free.


Secure your € 10 starting credit now

7 | Consider the investment to be a sure-fire success

A portfolio should be reallocated and balanced on a regular basis. If the investment horizon you set at the beginning is coming to an end, you should start thinking: What has become of your € 100,000? How much capital do you want to reinvest and how much do you need elsewhere? Are there now more profitable or cheaper alternatives to your previous investments? Would you like to risk more or less in the future? If you do not start restructuring your investments too late, you can avoid losses.

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