Hello my dears,
even though I don't invest in an ETF and have built my own Tenbagger ETF.
Here is the all-round carefree package for all those who don't want to or can't do it themselves.
500 euros sounds like a small sum at first. But on the stock market it can turn into millions in the long term.
Many people underestimate the power of compound interest, as the brain finds exponential growth difficult to grasp. Our ancestors had to weigh up distances, quantities or dangers. These linear relationships made survival possible. Exponential processes, on the other hand, hardly ever occurred in the natural environment, which is why the mind has not developed an intuitive shortcut for them.
In addition, exponential growth starts slowly and seems harmless at first. Although our wealth doubles regularly, the changes are minimal in the initial stages. At a certain point, however, growth suddenly explodes. This abrupt dynamic is beyond our imagination.
That's why we often find it very difficult to believe that we can become a multi-millionaire over decades, even with small savings. Many people have a good overview of short-term developments, but underestimate what is possible over decades.
The physics genius Albert Einstein therefore came to the conclusion: "Compound interest is the eighth wonder of the world. Those who understand it deserve it. Those who don't understand it, pay for it."
Advantages of ETFs
ETFs are a good way to benefit from the compound interest effect in the long term. They are easy and cheap to trade, spread across many major companies and, unlike complicated insurance policies, our money is always available.
Although it is also important to hold various funds here, the following ETF already covers many globally important companies with one purchase.
Vanguard FTSE All-World UCITS ETF
Unlike an MSCI World ETF, the Vanguard FTSE All-World UCITS ETF focuses not only on 25 industrialized countries, but also on 24 important emerging markets that would otherwise be neglected. It contains a total of 3,654 shares in which investors can participate with just one purchase without any minimum investment amount. One share currently costs just 127.52 euros (28.05.2025), making the fund also suitable for small amounts.
The index fund invests physically (without the use of swaps), was launched in Ireland in May 2012, now manages EUR 16.1 billion (28.05.2025), distributes its income quarterly and costs just 0.22% of the investment amount annually.
So far, it has developed very positively with a performance of more than 303 percent (28.05.2025). Investors who, for example, saved 500 euros per month and invested the sum of 6,000 euros at the end of each year have been able to build up assets of 159,833 euros to date with a total investment sum of 78,000 euros, meaning that the returns to date amount to 81,833 euros.
If we now assume a long-term average performance of 8.51%, which corresponds to the MSCI World average return since 1970, while the Vanguard FTSE All World UCITS ETF has even achieved 12.62% to date, EUR 500 per month (EUR 6,000 per year) would amount to EUR 1,062,400 in 33 years.
Our total investment would be 204,000 euros, while the returns would add up to 858,400 euros.
Here, too, the power of compound interest becomes apparent. The biggest increases only occur in the last few years and then amount to up to 82,849 euros per year, compared to only 510 euros at the beginning.
Conclusion ETF savings plan
ETFs make it possible to benefit from the miracle of compound interest with small amounts. Even if the gains are hardly noticeable at first, they increase faster and faster over time and eventually develop into an overwhelming avalanche that makes up for all previous sacrifices many times over.
Author: Christof Welzel, wallstreetONLINE editorial team, Investment Products section
