Savings Calculator

Compound interest means you earn interest not just on your initial deposit, but also on previously earned interest. For example, 10,000 EUR at 3% annual interest earns 300 EUR in year one. In year two, you earn 3% on 10,300 EUR (309 EUR), and so on. Over long periods, this snowball effect becomes dramatic: 10,000 EUR at 5% grows to 16,289 EUR after 10 years and 26,533 EUR after 20 years — without adding a single euro. This is why starting early matters more than starting big.

Financial experts recommend saving at least 20% of your net income — that's the "20" in the popular 50/30/20 rule. If 20% feels out of reach, start smaller: even 50 EUR per month adds up to 600 EUR per year, and with compound interest, grows faster than you'd expect. The most important thing is consistency — a smaller amount saved every month beats a larger amount saved sporadically. Use our Budget Calculator to find your ideal savings rate based on your income and expenses.

Saving means putting money in low-risk accounts (savings accounts, fixed deposits) where your principal is protected but returns are modest (typically 1-3% in 2025). Investing means buying assets like stocks or ETFs with higher potential returns (historically 7-10% annually for diversified stock portfolios) but with the risk of short-term losses. The general rule: savings accounts for money you'll need within 3-5 years (emergency fund, planned purchases), investments for long-term goals like retirement where you can ride out market fluctuations.

In 2025, traditional savings accounts in Germany offer 0.5-2.5% interest, while fixed-term deposits (Festgeld) can reach 2.5-3.5% for 1-2 year terms. High-yield savings accounts from online banks sometimes offer promotional rates above 3%. For comparison, broad stock market ETFs have historically returned about 7-8% annually over 20+ year periods, though with significant volatility. Our calculator lets you model different scenarios — try conservative (2%), moderate (4%), and optimistic (7%) rates to see the range of outcomes.

Inflation reduces the purchasing power of your money over time. If your savings earn 2% interest but inflation is 3%, you're effectively losing 1% in real value each year. With an average inflation rate of 2-3% in the eurozone, 10,000 EUR today will have the purchasing power of only about 7,400 EUR in 10 years. This is why keeping large sums in zero-interest checking accounts is costly. At minimum, your savings should earn interest that keeps pace with inflation — anything above that is real growth.

Financial advisors recommend an emergency fund covering 3-6 months of essential expenses. If your monthly fixed costs (rent, utilities, insurance, food, transport) are 1,500 EUR, aim for 4,500-9,000 EUR set aside in an easily accessible savings account. Self-employed individuals or those with variable income should target the higher end (6 months or more). Keep this fund separate from your long-term savings and investments — its purpose is immediate availability, not maximum returns. Once your emergency fund is complete, redirect those monthly savings toward long-term wealth building.

Choose a savings account when you need the money within 1-3 years, cannot afford any loss of principal, or are building your emergency fund. Choose ETFs (exchange-traded funds) when your investment horizon is 7+ years, you can tolerate temporary drops of 20-40%, and you want to outpace inflation significantly. A balanced approach works best: keep your emergency fund and near-term goals in savings accounts, invest everything beyond that in a diversified ETF portfolio. Many financial experts recommend starting with a single global ETF (like MSCI World) for simplicity.

In Germany, investment income (including savings interest) is subject to a flat 25% capital gains tax (Abgeltungsteuer) plus 5.5% solidarity surcharge, totaling about 26.375%. However, every individual has a Sparerpauschbetrag (saver's allowance) of 1,000 EUR per year (2,000 EUR for married couples filing jointly). Interest income below this threshold is tax-free. To claim this, submit a Freistellungsauftrag to your bank. For 1,000 EUR in interest income, you'd pay zero tax — at 2.5% interest, that covers savings up to 40,000 EUR tax-free.