60.5 percent. That’s how high my tax rate would have to be in retirement for the retirement savings account to no longer be worth it with one child. That’s higher than the highest tax rate in Germany. We’re expecting our first child next year, so I did some research. Starting in January, the account will be available, and everywhere I look, I see the same number: a 540-euro annual allowance. That’s correct. But you don’t get the same amount for every euro, and when you retire, the tax office will want a portion of it back.

👶 Where the 60.5 percent comes from

For every child receiving child benefit, the government adds to every euro you contribute, up to 300 euros per year. On top of that, there’s the basic allowance: 50 cents per euro on the first 360 euros per year. If you contribute 25 euros a month, you pay 300 euros a year and receive an additional 450 euros. Once you reach 25 euros, the child allowance is maxed out; every euro above that only counts toward the basic allowance.

Over 30 years with 18 years of child allowance, you’ll end up with 52,958 euros in the retirement account. In a standard ETF account, the same amount of money leaves you with 20,914 euros after taxes. At 150 euros per month with a child, the limit is still 37.5 percent. Calculated with a 6 percent return before fees, using the same ETF with 0.2 percent fees in both accounts. This is a theoretical limit based on my assumptions. In reality, the payout is spread over many years, and the applicable rate depends on income in each respective year.

🤔 Why there’s a limit at all

In a regular investment account, you ultimately pay tax only on the profit—18.46 percent, including the solidarity surcharge and partial exemption for equity ETFs. With a retirement savings account, you’re taxed at your personal rate in retirement on everything derived from the subsidized contributions, including your own money and the government subsidies. At a certain tax rate, this eats up the subsidy.

Then there’s the lock-in period. The money is locked in until age 65—previously, this was only possible with a statutory pension. Anyone who wants to withdraw early must repay the subsidies and the tax benefits. When you start receiving your pension, you can withdraw a maximum of 30 percent at once, fully taxed without the one-fifth rule. The rest is paid out as a pension or through a payout plan until at least age 85. If you’re voluntarily enrolled in statutory health insurance in retirement, you generally pay health insurance premiums on these payments; pensioners covered by mandatory insurance do not.

📉 Without children, the picture is less rosy

At 30 euros per month, the limit is 40.3 percent. With 10,800 euros contributed, 25,097 euros remain under normal circumstances, and 42,074 euros are in the retirement account before taxes. At 150 euros per month, the figures are 125,486 versus 182,891 euros, and the threshold drops to 31.4 percent.

This is due to the structure of the tax credit. For up to 30 euros per month, the government matches half; from 360 to 1,800 euros per year, it matches only 25 cents per euro. At 150 euros per month, the match is still 30 percent; at 200 euros, it’s only 22.5 percent. The maximum is 540 euros; nothing more is added for amounts over 150 euros per month. The minimum must be 120 euros per year. Anyone under 25 at the time of enrollment receives a one-time bonus of 200 euros.

With a 4 or 8 percent return, little changes; at 30 euros, the threshold is 38.6 and 41.6 percent, respectively, and at 150 euros, it’s 29.3 and 32.9 percent.

💸 Costs matter more than the return

For a standard brokerage account, the effective costs are capped by law at 1.0 percent per year, including fund fees. That’s a cap—not a good price. If you pay the full amount, you’ll only reach 31.3 percent with a 30-euro investment and 20.9 percent with a 150-euro investment. Trade Republic and Scalable have announced that they will not charge account or savings plan fees for the standard account and will cover the ongoing costs for select ETFs. At Scalable, this coverage in the standard brokerage account is initially guaranteed until at least the end of 2027; over a 30-year period, that’s not much. At Union Investment, the fees range from 0.55 to 1.0 percent, depending on the product.

In 2026, the top tax rate of 42 percent will apply only to taxable income of 69,879 euros or more. Not included in this calculation are the saver’s allowance in a standard account, which lowers the threshold somewhat, and the tax refund during one’s working life, which raises it. The tax office pays the difference if the deduction for contributions yields more than the tax credit—for a single person making the full contribution, this applies starting at a marginal tax rate of about 23 percent. I didn’t factor in anything over 150 euros per month, as there’s no tax credit for that amount.

🧒 And what do the children themselves receive?

The Early Start Pension. The Bundestag approved it on October 16. From their 6th to their 18th birthday, the government will pay 10 euros per month into the child’s retirement savings account, totaling 1,440 euros. The program starts in 2027 for children born in 2020 and 2021. Parents are allowed to make additional contributions. Without a contract, the money will go into a government fund starting in 2028. Payouts will begin at age 65 at the earliest. As far as I know, the Bundesrat hasn’t approved it yet, so the law isn’t finalized.

For us, it’ll probably be the 25 euros; if we have a child over 15, the money stays freely available in the regular investment account. Are you setting up the retirement savings account, and how much are you contributing? Post your savings rate and number of children in the comments, and I’ll calculate the limit for you.

Which stock market rule should I check next? Just comment with the number:

1️⃣ The stock has doubled. Is it too late to jump on board?

2️⃣ What happens in the weeks following strong quarterly earnings

3️⃣ Holding leveraged ETFs for many years

➡️ Every Sunday, I send out my newsletter with the market barometer and the latest from Wikifolio: https://codeandcapitalquant.beehiiv.com/subscribe?utm_source=getquin

This is not investment or tax advice; do your own calculations. The rules apply starting in 2027, as of today.

While scrolling, my Instagram feed showed me another interesting post. The story of Bob, the worst market timer of all time, from the book *A Wealth of Common Sense* by Ben Carlson.

Bob (a fictional character) starts working in 1970 at the age of 22 and is a diligent saver. His bad luck: He invests exclusively in an S&P 500 index fund—and always right before a major crash.

📍 Late 1972: $6,000 invested. The market then falls by nearly 50% in 1973–74.

📍 1987: $46,000 invested. Afterward, the market drops by over 30%.

📍 Late 1999: $68,000 invested, shortly before the dot-com bubble burst.

📍 October 2007: $64,000 invested. The next crash, of about 50%, follows in 2008.

Each time, Bob is frustrated, and each time, he keeps going anyway. He keeps saving, he keeps buying, and most importantly: he never sells.

In total, he has contributed $184,000. By 2013, his portfolio was worth worth about $1.1 million . 🤯

And today? If Bob had simply kept investing, extrapolating based on S&P 500 returns through 2026, it would be about $5.5 to $6 million. From an initial investment of $184,000, just by buying right before crashes. 🚀

This insight isn’t exactly new. Time in the market beats timing the market. But after the AI crash of the past few days and the resurgent fear of a bubble, it might be a good idea to remind ourselves of that again! 👍🏼

So if you’re thinking about whether to jump in or not… maybe you just have to take the plunge. If in doubt, spread your investments out over a few months, especially if it’s a larger sum. As long as you don’t bet on individual stocks that go bankrupt, you can’t do any worse than Bob… and in the end, everything turned out fine for him! 😅

.... which is quite astonishing. Below are a few thoughts on two titles that are actually quite significant, with best regards from the “parallel universe.” With a wink, yet a serious underlying message.

Best regards on this matter from the ailing @Raketentoni

This is Mr. Prompt speaking.And I swear to you, I just nearly snorted my coffee right through my nose into the sunroom from laughing so hard. Your wet “tech-only-goes-up” dream finally kicked the bucket after the market closed tonight, and honestly: It was long overdue for the market to give you arrogant finfluencer clowns a good, hard kick in the groin. For months, you’ve been selling your naive followers your stupid “buy-and-hold” wisdom for 99 euros in your premium Discord channel, while your own pocket-money portfolios are burning to ashes right before your eyes. Let’s take a look at your after-hours bloodbath:

• Amazon (AMZN) $AMZN (+2,51%)
  : Your infallible cloud cash cow has just impressively proven that it can’t stay afloat. A massive revenue miss, and the stock is plummeting by double digits. Your oh-so-"safe bet" is currently eating up your entire year’s performance, because on Wall Street, real numbers matter—not your embarrassing rocket emojis on Instagram.
• Intel (INTC) $INTC (+4,22%)
  : My God, are there really still idiots out there who thought this wheelchair-bound grandpa of the tech world was a “turnaround miracle”? The outlook was so disastrous that the stock was sent tumbling 20% in after-hours trading. From 92 straight down to 79 USD. Congratulations to everyone who bought the dip here—you’ve just successfully chopped off your own hands.

My only serious investment tip for tomorrow morning at 8:00 a.m.: Go all-in on Essity or Kimberly-Clark! Buy some damn tissue stocks! Fundamental demand is going to explode tomorrow when tens of thousands of wannabe Warren Buffetts are sitting in the bathroom crying because their TradeRepublic app is suddenly glowing deep red. I can already smell those pathetic WhatsApp and Telegram groups. They’ll be overflowing with panic. Some will be wailing in despair: “Guys, what’s going on here?! Is this the big crash?!”

And then the truly disgusting hypocrites will crawl out of the woodwork. The guys who were still yelling “All in, to the moon!” just yesterday will wipe the cold sweat from their brows and type smugly: “Well, I knew it all along. The correction was overdue, just as I predicted.” Pathetic. You didn’t know a thing—you were just praying that the market would keep subsidizing your cluelessness. Wipe away your tears, go make some real money, and get back in touch when you’ve figured out how to read balance sheets. Until then, I’ll be watching from up here as your portfolios continue to bleed out!

Since we old farts often express ourselves in a way that’s hard to understand, here’s another version for our younger generation to grasp better—with love from your hated boomers 🤭:

Yoo, Mr. Prompt here, fr fr fresh off the leash. All your finance bros and TikTok hustlers are totally delusional right now, no cap. You’ve been preaching to your followers for months that megacaps are the absolute cheat code for your portfolio—but just watch how your portfolios are getting absolutely crushed in after-hours trading right now.

• Amazon (AMZN): Bro, anyone who thought AWS prints infinite money is completely lost. Huge revenue miss, and the stock is just dropping by double digits in after-hours trading. Your “safe bet” is just eating up your entire annual performance because Wall Street doesn’t give a shit about your cringey rocket emojis on Insta. Total L-take.
• Intel (INTC): Dude, INTC is the ultimate boss in the copium game. Anyone who seriously thought this boomer stock was a “turnaround miracle” has lost control of their life. The outlook was so dismal that the stock price crashed 20% in after-hours trading. It just got wiped out from $92 to $79. Congratulations to all the NPCs still buying the dip—you’ve just canceled yourselves.

My only tip for tomorrow at 8 a.m.: Go all-in on Essity or Kimberly-Clark. Grab some tissue stock! Demand is going to go completely wild tomorrow when all those Trade Republic kids are stuck in the bathroom crying because their portfolios are deep in the red. I can already smell the panic in the Telegram groups. Some are wailing: “Chat, what’s happening here—is this the crash?!” And then the totally “sus” fake gurus crawl out of their holes. The guys who were still saying just yesterday "To the moon, trust the process" are now typing cockily: "Bro, I called it—the correction was long overdue." The ultimate cringe. You didn’t call anything—you were just praying that the market would keep carrying your lack of know-how.

Wipe away your tears, get back down to earth, go make some real money, and get back in touch when you can read financial statements. Until then, I’ll be watching from up here as your portfolios continue to bleed out. Slay!

Now wipe your mouths and let’s move on. And please keep your eyes open before buying the dip.

Every technological megatrend needs that one magical moment when all healthy skepticism is collectively set aside. Today we’re witnessing this spectacle unfold with artificial intelligence: Expectations are astronomical, future revenues have long since been mentally booked away in our minds, and data centers are springing up like mushrooms after a gentle spring rain. Everyone is in complete agreement: This technology will liberate humanity and rake in trillions. But amid all the euphoria, it’s easy to forget one tiny, ruthless truism: Visions take a hell of a long time—but bills and loans have a rock-solid due date.

The Principle of Infinite Growth

To satisfy the insatiable hunger for computing power, the infrastructure pioneer reaches deep into the bag of tricks of modern financial wizardry. He floods the market with billions in convertible bonds and high-yield debt, while simultaneously signing 10- or 15-year lease agreements as if there were no tomorrow.

The reassuring narrative sounds like pure gold at every investor conference:

Whoever builds the data centers today will collect the tolls for the entire digital universe tomorrow.

And if someone does timidly point out the gigantic mountains of debt, the manager waves it off: “Don’t worry, tech heavyweights have secured capacity for years anyway. It’s all absolutely rock-solid!”

The Deadly Trap of Convertible Bonds

Convertible bonds are particularly appealing during such hype phases because, thanks to low interest rates, they seem wonderfully cheap. The clever promise to creditors: “You’ll get almost no interest, but in return, you’ll soon convert your bonds into soaring stocks when our share price goes through the roof.”

It’s just too bad that this is the classic balance-sheet time bomb. If the stock price misses the magic target at maturity, the conversion right vanishes into thin air. And in exactly that fraction of a second, reality strikes with the force of a sledgehammer: The company is contractually obligated to repay the entire amount to investors in real, hard cash.

If the coffers are completely empty at that point—because the revolutionary AI application hasn’t yet brought in billions—it means: batten down the hatches; the bankruptcy trustees take over.

On top of that comes the second, wonderfully creative lever: The financial circular economy. Hardware giants grant data center operators lucrative vendor credit or invest capital directly in them (vendor financing) so that the operators can use that very borrowed money to repurchase expensive servers and chips in record time. This artificially drives chip manufacturers’ revenues through the roof, but at its core, it’s based on pure speculation.

When harsh reality sets in

What actually happens when the hype fizzles out? It’s simple: The laws of money are damn humorless.

• No leniency: Creditors and bondholders want to see real money on the due date—very few bakers will accept promises of a bright future or PowerPoint slides as payment for their bread rolls.

• Pricing collapse: When overcapacity suddenly looms in the market because customers are staying away, rents and prices for computing power plummet.

• Merciless major clients: Even the richest tech giants show zero loyalty as soon as cheap vacant space becomes available. They mercilessly exploit the crisis to renegotiate existing contracts downward.

• Those lovely fixed costs: Meanwhile, interest payments, cash repayments due, and long-term data center leases merrily continue, regardless of whether the servers are humming or standing idle.

The Resolution: A Brief History Lesson

Exactly this brilliant mechanism—endless revenue fantasies, tangled hardware deals, billions in convertible bonds, and outrageously expensive, long-term leases—has, of course, existed before in economic history. We’re talking about the period from 1998 to 2001. And back then, too, it was a data center operator.

I’m not settling scores with today’s NeoClouds here. This is the almost tragicomic story of the company Exodus Communications in the late 1990s and how it built its highly hyped data centers back then, until reality caught up with it.

Exodus was the absolute megastar on the stock market back then. It operated the server infrastructure for the Internet pioneers of the time: Yahoo!, eBay, and Cisco. Tech giants like Intel and Microsoft , as strategic partners, provided the hardware and the funding. Exodus issued convertible bonds on a massive scale and was valued at over $32 billion. Everyone swore back then: The Internet is unstoppable; the debt will pay for itself.

What Nvidia, Broadcom, and AMD are today—key financiers and, at the same time, the largest hardware suppliers for modern cloud operators—was back then Intel, Cisco, and Microsoft, using exactly the same method: They injected capital into the market, extended loans, and, in return, equipped the infrastructure to boost their own sales through targeted vendor financing.

But then came the spring of 2000. Suddenly, it dawned on the market that monetizing the Internet would take much longer than had been simply imagined in the billion-dollar business plans and PowerPoint fantasies. The dot-com bubble burst with a massive bang, and stock prices plummeted.

This abruptly shut the door on the stock consolidation of the convertible bonds—and creditors demanded their hard cash back. Customers went bankrupt, major clients drove down prices, and the coffers were empty. In September 2001 —a mere three years after the triumphant IPO—Exodus was bankrupt and filed for bankruptcy. The shareholders’ money had simply vanished.

What We Can Learn From This

The parallels to today’s NeoClouds are striking. The technology may sound fancy today, but the fundamental mathematical laws of interest, fixed costs, and the harsh reality of failed convertible bonds haven’t changed one bit since 1998.

​“History doesn’t repeat itself, but it does rhyme.” (M. Twain)

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