Large Sum Alert: Could this marks the start of financial independence? (paraphrased from "100,000 euros: Is this the beginning of financial freedom?")

Achieving the initial sum of 100,000 euros is often seen as a key step for future prosperity. However, the question remains: is this amount sufficient for retirement? What steps follow after reaching this significant marker?

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2025 September 13 . 5:45 PM

2 min read

Financial prosperity within reach? Is 100,000 euros the key to financial independence?

Large Sum Alert: Could this marks the start of financial independence? (paraphrased from "100,000 euros: Is this the beginning of financial freedom?")

At the age of 40, a private investor who has amassed 100,000 euros and earns a steady annual interest rate of 7% could potentially withdraw around 7,000 euros per year, living financially independently while keeping the principal intact. This milestone is emotionally important, signifying the achievement of a six-figure wealth amount for the first time.

Investing wisely is key to growing this wealth. It is recommended to invest 10-20% of monthly income in low-cost, broadly diversified ETFs. With a 5% annual return, someone who invests 100,000 euros can expect an average of 5,000 euros in growth each year without additional effort.

However, it's important to note that 100,000 euros is a solid foundation but not enough for financial freedom. Reaching 1 million euros over decades is possible with regular savings and a good investment strategy.

Starting early gives a massive advantage in achieving financial goals. The first 100,000 euros mark is also mathematically significant due to the effect of compound interest. With a 7% annual return, 100,000 euros could become over 400,000 euros in 20 years.

It's crucial to reinvest returns for the compound interest effect to be fully beneficial. Without any additional contributions, 100,000 euros could become 200,000 euros ten years later, 400,000 euros twenty years later, and 800,000 euros thirty years later.

Someone who has 100,000 euros by their mid-30s is on a solid track for retirement. 100,000 euros can provide a sense of financial security, as it is above the average annual gross income in Germany.

Savers could withdraw between 20,000 and 28,000 euros per year without consuming the capital, assuming a 5-7% return. However, frequent transactions and shifts in wealth can incur fees and trigger tax liabilities, so it's essential to plan carefully.

With a good investment strategy and patience, wealth can grow exponentially. For example, an average return of 7% per year on a diversified and long-term stock investment can double the capital every ten years.