Financial preparedness is often misunderstood as a project for “later.” For the time when the salary finally allows the big jumps. But if you wait until you have 500 or 1,000 euros left per month, you are making one of the most expensive mistakes in private wealth creation: giving up time. Especially when it comes to savings goals for children or the first steps towards your own wealth, it is not the amount of the deposit that is important, but the duration of the investment.
The problem is simple: Anyone who parks money in their current account or savings account suffers a real loss of purchasing power due to inflation. At the same time, the power of compound interest is missing, which, mathematically speaking, only develops its full dynamic after ten to fifteen years. Anyone who puts aside 25 euros today is not only investing in covering future costs such as the driver’s license or the first deposit, but is also securing valuable time in the market.
The mechanics of long-term wealth creation
To understand the logic behind small savings rates, we need to consider three core concepts:
- The compound interest effect: With a long-term investment, income is reinvested (accumulation). This means that next year interest will be paid not only on the original capital, but also on the profits already earned. Over 18 years, the effect turns a linear savings rate into an exponential curve
- Diversification via ETFs: Efficient wealth creation should never be based solely on individual stocks. Instead, exchange traded funds (ETFs) are used, which track entire indices such as the MSCI World. The risk is thus spread across thousands of companies worldwide
- The asset allocation: This refers to the distribution of capital across different asset classes (stocks, bonds, commodities). Smart allocation is responsible for around 90% of investment success, well before the selection of individual stocks
A modern example of the implementation of these principles is the robo-advisor OSCAR2. It automates the process by putting together a professional portfolio of up to ten different ETFs for small amounts of just 25 euros. The capital is diversified not only into stocks, but also into inflation-protected bonds and gold. Private investors could hardly do this manually with 25 euros, as the transaction fees for purchasing individual ETF shares alone would eat up the savings rate.
Open OSKAR ETF SPARPLAN now
Start building your wealth now OSCAR – the simple ETF savings plan.
Over 150,000 customers are already investing with OSKAR. You can do that too.
The bare numbers: investments vs. savings accounts
To illustrate the power of compound interest, it is worth taking a look at the projection over 18 years with a monthly savings rate of 25 euros (total deposit: 5,400 euros).
| Post | Invested (ø 5% pa) | Savings book / daily money (0%) |
| Your total deposits | €5,400.00 | €5,400.00 |
| Interest/appreciation | ~€3,250.00 | €0.00 |
| Final capital (vsl.) | ~€8,650.00 | €5,400.00 |
| Purchasing power after inflation (2%) | approx. €6,050.00 | approx. €3,780.00 |
Assumption: 5% return per year after costs, before taxes. Inflation reduces the real value of money.
The exciting thing about it? In the first few years, relatively little happens visually. But the larger the capital stock becomes, the more massive the returns become. In reality, markets naturally fluctuate (volatility). A system like OSKAR counteracts this by broadly diversifying into different asset classes so that the goal, be it a driver’s license or the first car for one’s 18th birthday, can be achieved.
| 💡But is that even enough for a driving license? A driving license today costs between 2,500 and 3,500 euros, depending on the region and number of driving hours. With a predicted final capital of around 8,650 euros, the “first great freedom” would not only be fully financed, but there would even be a buffer of over 5,000 euros left for the first home furnishings or a used car. The savings account, on the other hand, would hardly cover the costs of driving school in real terms (adjusted for purchasing power). |
Why manual implementation often fails
Theoretically, every investor could open a portfolio with an online broker and save an ETF every month. In practice, however, the project often fails due to complexity and administrative hurdles:
- Rebalancing: If the stock markets rise sharply, the relationship between asset classes shifts. You would now have to sell and reallocate shares manually in order to maintain the target risk. This costs time and fees
- Tax component: In Germany, every investor has a flat-rate savings amount of 1,000 euros per year. For accounts for children, the basic allowance is even added. A smart solution like OSCAR2 uses these allowances automatically and optimizes the tax burden within the scope of the legal possibilities
- The “paperwork–Hurdle”: While with traditional branch banks you often fail because of mountains of forms for a child custody account, with digital providers the process is completely digitalized. OSKAR actively supports the legally secure facility for minors so that bureaucracy is no longer an obstacle
Automation as a psychological anchor
The biggest enemy of wealth creation is not the stock market crash, but human psychology. Once a standing order is set up, the system works like a digital piggy bank with built-in expert knowledge.
The process does not remain a “black box”, because in the OSKAR app you can not only track the performance in real time, but also use integrated forecasting tools to visualize how the compound interest is likely to develop over the remaining years. This turns abstract saving into a tangible project.
Conclusion: Time is more valuable than timing
The biggest mistake when building wealth for children is not a supposedly low savings rate, but rather waiting for the “perfect” moment. Because anyone who hopes to only be able to invest when there are large surpluses is wasting the most valuable years of compound interest. Modern robo-visors are democratizing the capital market: where high minimum amounts and in-depth specialist knowledge were previously necessary, automated solutions such as OSCAR2 barrier-free entry today. A professionally managed ETF savings plan relieves parents of the operational burden and ensures that 25 euros a month up to your 18th birthday becomes real starting capital for your first great freedom, be it a driving license, studying or your first apartment.
Manually managing a globally diversified portfolio would simply be inefficient and error-prone for small amounts. Instead, digital systems take over the complex work in the background: from intelligent ETF purchasing to risk-appropriate rebalancing to the automated use of tax allowances. This makes building wealth a process that does not require active maintenance, but only one ingredient: perseverance. If you take the first step today, you let time work for you and transform a small monthly routine into a significant perspective for the next generation.
Frequently asked questions about the “driving license fund”
When should you start saving for children?
The sooner the better. Because compound interest grows exponentially, deposits in the first few years of life have the greatest leverage. Just 25 euros from birth can form a solid basis until you come of age.
Who owns the money in the child custody account?
With a dedicated child custody account (such as the OSKAR children’s custody account), the assets legally belong to the child. This has tax advantages because the child uses their own basic allowances. The parents only manage the money in trust until the child comes of age.
What happens when the child turns 18?
When the child reaches the age of majority, sole power of disposal passes to the child. The deposit can then either be closed (e.g. for a driver’s license or studies) or continued as a basis for your own retirement provision.
Can I flexibly adjust the savings rate?
Yes. A modern savings plan should adapt to life. With OSKAR, installments can be paused, increased or supplemented with a one-off payment at any time – ideal if the grandparents want to contribute something for their birthday.
How safe is money with a digital provider?
A critical point in long-term investing is security. The invested capital is legally treated as special assets. This means: Even in the unlikely event of the provider or the custodian bank going bankrupt, the investors’ assets remain protected and do not fall into the insolvency estate. It still belongs solely to you or your child and can be transferred to another depot.
Open OSKAR ETF SPARPLAN now
Start building your wealth now OSCAR – the simple ETF savings plan.
Over 150,000 customers are already investing with OSKAR. You can do that too.
2Note: Oskar is a brand of Oskar.de GmbH, a spin-off of finanzen.net GmbH. Scalable Capital Vermögensverwaltung GmbH manages the assets, Baader Bank AG manages the securities accounts with clearing accounts. Further information can be found here.