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How to make your children millionaires

von Stefan Heringer

Heads up: We reveal the secret to effortlessly turning your kids into millionaires! And you don’t need to be rich to start. But don’t worry, we haven't joined the ranks of dream-sellers and daydreamers.

Many folks start saving for their children early on, ideally from birth. If you have underage kids in Germany, you’re entitled to child benefits, and as of January 2023, it's €250 for each of your first three children. We often hear from clients that they don't truly need this child benefit. So, why not just save it?

What if you saved the child benefit for 20 years?

What if you consistently did this from day one? You and your children have time on your side. So, why not take an aggressive approach with a pure equity ETF?

€250 monthly for 20 years amounts to €60,000 (€250 x 12 x 20). Remember, this is money that you receive from the state without lifting a finger.

Assuming a yearly return of 5.6%, that would result in over €108,000 in 20 years. That’s a nice base for pricey (overseas) education. This makes the search for a suitable property for your first home or a suitable place to study much more relaxed, at least from a financial point of view. Later on, this could also serve as a welcome subsidy for your own home.

Compound interest: The 8th World Wonder

Now, what if your heirs don’t touch that capital and simply let the assets continue to work without adding a dime? You guessed it: the magic of compound interest. By retirement age at 67, the capital stock would skyrocket to €1,410,482.

And before you object that no account has been taken of the inflation rate - the 5.6% is the annual real return on the MSCI World between 1970 and 2021, i.e. adjusted for purchasing power!

Consistency trumps wizardry

As you can see, there's no smoke and mirrors here, nor an unrealistically peppy "go-getter" attitude promising the world on a platter. All you need is to start early, be persistent, stay the course, and take calculated rational risks. Let the stock market do the rest, and your kids will thank you.

If you haven’t set up a savings plan for your little ones, the clock's ticking! The same applies if you want to gift something similar to your grandkids. If you're one of our clients, please contact us and we'll show you how.

Best wishes,

Stefan Heringer
Forty-Nine Fee-Only Advisors

PS: Please feel free to send any questions, criticism or comments to

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