How to Invest €100,000

The rules that you need to consider are the following:

1. Taxation — it is the most important. Spend time looking at the best vehicle to invest in to reduce your tax bill. Over a long period of time, it could mean having double what you have if you plan it correctly.
2. Invest in financial products you do understand. Many are complex, or use words to make them seem more complicated than they really are. Keep it simple, and with this guide you'll be equipped to invest correctly.
3. Keep the upfront cost and running fees to a minimum. It is probably the goal of any advisor or bank to make you pay for their services, but in many cases they are overpriced compared to what you can get yourself. Any upfront fee requested is suspicious, and any fee to close an investment is not the norm anymore, unless it relates to performance fees.

After choosing the right support and account to be efficient from a tax and cost perspective, it is time to invest. The first decision is asset allocation — what are you going to invest in?

There are many options, but usually you decide what percentage to put in four buckets: equity, fixed income, gold, and cash.

Equity is owning a share of a company. You become a shareholder and receive a share of the dividend the company pays, usually in cash — though some profitable companies pay none. Equity splits into listed (traded on an exchange, Monday–Friday) and private (not listed, harder to buy or sell, and without a daily valuation — ChatGPT's parent company, for instance, is private).

Fixed income is like lending money to an entity. It usually has a fixed maturity and a fixed coupon, and either you're paid back in full or the borrower defaults. You can lend to governments, banks, insurers, or industrial companies — either investment grade (safer, lower coupon) or high yield (riskier, higher coupon) — to a single entity or a diversified basket.

Gold is the safe asset. It's been used for thousands of years to store wealth, precisely because it isn't linked to any currency or the amount of currency in circulation. Bitcoin is trying to complement this same principle — time will tell.

Cash is a buffer: protection against a drop in prices, and the ability to invest when assets get cheaper.

It depends on your age and how much you're prepared to lose — though age has nothing to do with your appetite for risk, only with the fact that most people invest to retire well. As a rule of thumb: allocate to equity as 100 minus your age. At 20, that's 80% equity; at 60, closer to 40%. Cash sits between 0% and 5% — near zero when markets are down and you're buying, closer to 5% when markets are high and the buffer needs replenishing before a drawdown. Gold sits around 5%. The remainder goes to fixed income. None of this is hard-coded — it's simply the norm.

Why allocate like this? Here's what each asset class actually returned in Euro over the last 25 years:

Read it like this: deposits made a mere 1% on average over 25 years, with a median of just 0.3%. Gold has done remarkably well — it doubled between September 2023 and 2025 alone, having barely moved from 2012 to 2020. Equity is the second-best performer; fixed income (government bonds — the safest) made 4.1% a year, less exciting than equity's 7.9%, but equities lose roughly three times as much when things turn south. Which is the better trade — twice the upside, or a third of the downside? Not an easy question, which is exactly why a mix of both makes sense.

Adjusted for inflation, the target becomes 3.5%–5% real return. Note the asymmetry: the median outcome (3.6%) sits below the average (5.8%) — because when markets fall, they tend to fall harder than they rise. Buckle up.

Exhibit 1 · Ka3 Research

The economy tends to grow — more people spend, companies make more money — so owning a slice of the world economy has historically returned 8–10% a year. Fixed income sits alongside equity to soften the falls. Looking at quarterly returns over the last 25 years (100 quarters), equity lost money in 31 of them — and in 27 of those 31, fixed income gained, averaging +5%. Equity and fixed income genuinely work as a pair: one drives long-term gains, the other cushions the losses.

This is the hard part: how do you know if the market is pricing something cheap or expensive?

Think about valuing a flat. You know its size; the neighbourhood tells you the going price per square metre. A 100 sqm flat at €5,000/sqm is worth roughly €500,000 — a starting point, adjusted from there for floor, noise, and view. Valuing financial instruments works the same way: you multiply something you know by a multiple the market is currently paying for it.

Take the S&P 500 — the 500 largest US companies. We know their combined annual earnings, published quarterly. Say that's $250 per index share. If the index trades at 5,000, that's a multiple of 20x — or, put simply, 20 years of earnings to get your money back. Over the years, that multiple — the P/E ratio — has ranged roughly from 10 to 30 depending on the economic outlook:

Exhibit 2 · Source: Bloomberg

Good question. It depends on the outlook for earnings. If earnings are expected to grow from $250 to $275 (+10%) and the index stays at 5,000, the multiple actually falls to 18.2x — cheaper, despite stronger earnings, which doesn't make sense unless the market re-rates the index up toward 5,500 to hold the multiple steady. The flat analogy holds: add 10% more floor space, and the flat should be worth more, or its price-per-sqm quietly falls, which makes little sense either. A few things push the P/E ratio around:

1. Earnings growing quickly tends to push the multiple higher.
2. The quality and stability of those earnings also push it higher.
3. Adding debt pushes it lower — unless that debt funds real investment (a mortgage-free flat is worth more than an identical, mortgaged one).

Early-stage companies with no earnings can't be valued this way — so we use revenue instead, and the same idea becomes the Price/Sales ratio.

Now, fixed income — simple bond mathematics. A bond pays a coupon on a schedule and returns your principal at maturity:

A 5-year bond pays 5 coupons, then the principal at maturity. The coupon's size depends on the issuer's riskiness — much like a bank sizing a mortgage to your income. As a rule of thumb: roughly 3x debt-to-earnings or less is Investment Grade; more, and it's High Yield (junk). Lower ratio, safer, lower coupon. Higher ratio, riskier, higher coupon.

Take a one-year bond with a 5% chance of default. Buy it for $100 with a $10 coupon: 95% of the time you get $110, 5% of the time you get $0. Expected value: 95% × $110 + 5% × $0 = $104.50. Buy it at $100, and you've bought it cheap. Compare that to a risk-free 2% deposit rate returning $102 — the difference, $2.50, is the spread: what you're paid for the risk you're taking.

At the time of writing (Q4 2025), the market was actually paying a spread of 1.02% in IG and 3.80% in HY — cheaper than fair value by 0.40% and 1.55% respectively. Despite the "junk" label, High Yield was offering more value. The lesson: what's labelled riskiest can be the cheapest, and the best investment — hence the need to always look at relative value.

Last, gold. It survives in the ground for a thousand years without corroding; it's malleable enough for jewellery and electronics; it's dense enough to store a fortune in a small space; and it's hard and expensive to produce, unlike diamonds. That's why it's stored wealth for millennia.

Total gold on Earth: roughly 250,000 tonnes, 80% already mined. At €150k/kg, that's a total stock worth about €37 trillion — versus €125 trillion in listed equities worldwide, and roughly €340 trillion in global bonds. If half of mined gold is jewellery and half is store-of-value, and Bitcoin is trying to be the modern equivalent, the read-through for Bitcoin is roughly €900,000 (half of €37tn ÷ 21 million coins). Go Bitcoin, go.

Now that you know the allocation and how to think about valuation, it's time to pick instruments. There are tens of thousands of options — here is what I actually use. It is not a recommendation. It's what I use to invest.

Equity — the MSCI World index (created by Morgan Stanley) covers large and mid-cap developed-market companies. It's heavily US-weighted (72%), especially US tech (27% — Nvidia, Apple, Microsoft, Amazon, Meta, Google), and has zero exposure to emerging markets. I combine three funds to balance it out:

• iShares MSCI World (EUR) — 75%IWDE LN · IE00B441G979
• iShares MSCI Emerging Markets (EUR) — 20%EIMI IM · IE00BKM4GZ66
• iShares MSCI Europe (EUR) — 5%IMAE NA · IE00B4K48X80

Think of it as a passport number for a financial instrument — it makes sure you're buying, selling, or trading the exact right one. The same instrument can trade on several exchanges (London/LN, Milan/IM, and so on); when you enter the ISIN, your platform may offer a few. Picking the default is usually fine.

Fixed income — three funds, in increasing order of risk and, historically, return. Remember: high yield can hand back all its outperformance very fast, as it did in early 2020, when it briefly converged with investment grade.

Exhibit 3 · Source: Bloomberg

• iShares Government Bonds 7-10yrSXRQ GR · IE00B3VTN290
• iShares Investment Grade Core EURIEAC LN · IE00B3F81R35
• iShares High Yield EURIHYG LN · IE00B66F4759

There are riskier — and at times more rewarding — bond structures with funky names: CLOs, Closed-End Funds, Business Development Companies. More on those another time. One rule above all: do not invest in a financial product you don't understand. Please.

Gold — you can hold a paper product that tracks the price, or a share of physical gold in a vault. I prefer the latter, held in Zürich. The cost is a small annual fee, around 0.1%:

• Swisscanto Gold (EUR)ZGLDEU SW · CH0047533523

FX is shorthand for foreign exchange — trading one currency for another.

Because you'll likely live and spend in Europe. But you can still get USD or GBP exposure without taking on FX risk, using an FX forward: agree today to exchange €100 for $110 at a fixed date, and separately agree to swap back in a year. Combine the two, and effectively you invest $110 for a year on €100 of capital, with the currency risk removed. At maturity you simply roll the forward again, for as long as you want to hold the position.

Picture a coffee shop: €100,000 in annual sales, €40,000 cost of goods (coffee, cakes, croissants). Gross profit: €60,000. Two employees and rent cost another €40,000. Net profit: €20,000.

Add the furniture and coffee machines (€25,000, depreciated 20%/year) and a €5,000/year bank loan repayment, tax at 25%, and the picture gets more accurate:

EBITDA is one of the most important numbers in finance — the basis for most valuation multiples. Precisely because it matters so much, it's also the line most often flattered with one-off or exceptional items. Sell the coffee machines for a €10,000 one-off gain and lease them back instead: EBITDA jumps €10,000 for one year, while interest expense (the lease cost) rises €2,000. Understanding a business means looking past the headline number.

You're right that the owner isn't paying €5,000 out the door each year for it — but it lowers taxable income, which is real. That's also why investors watch Free Cash Flow (Net Income + D&A — €13,000 here) — the actual cash moving through the business, adding back the non-cash charge.

I'm not a fan of real estate as an investment, though I understand the appeal: it's easy to understand, you can leverage it, and the cash flows are fairly predictable. I've never made a consistent return on mine — sometimes I've lost money — though plenty of investors do very well from it.

Buy a €500,000 flat, and a bank will typically lend 80% (€400,000) against a 20% deposit (€100,000) — five times leverage on your own capital. The bank holds the property as security until the loan is repaid: your 20% deposit means they don't lose money even if you stop paying, provided prices haven't fallen more than 20%.

Total interest paid: €150,541 — 38% of the loan, over 15 years.

Stretch it to 30 years and the rate rises (longer risk for the bank), but the annual payment drops — from €36,700 to €27,400. The bank actually prefers this: it earns more interest for longer, and a lower payment looks attractive to you.

Lower annual payment, but €423,231 in total interest — 106% of the mortgage size — more than double the 15-year loan's cost, for the comfort of a smaller monthly bill.