I'm 19 years old Software Development Student from The Netherlands

Currently i'm making around a €500 (600USD) a month. My parents are saying that I should deposit at least 35% of my wage to my bank account. I have also been thinking about investing €75+ each month in stocks. I have some experience with stock trading and I know the risks of it.

What would give a better result in the next 5 years?

I do not have a student loan so I will not be in debt after I'm done with my degree in 4 years from now.

I'm also living at home; my total month expenses are around €100 - €160.

I was looking for ways to improve my overall net worth. After I'm done with school I would like to buy my own house around the € 200.000 range and have enough to establish a family.

  • 1
    You don't have 100% of your wage deposited in you bank account or do you mean a cash savings account separate from your main bank accounts? Jun 8, 2018 at 19:14
  • Are you going to take out a loan for the house or do you expect to pay cash for it?
    – David G
    Jul 12, 2018 at 20:40

2 Answers 2


The stock market isn't a gamble. It's a strategy.

Growth is the tendency for an investment to grow over the long term. Volatility is the tendency for an investment's value to zigzag upward and downward in the shorter term.

Growth and volatility are a matched set.

  • A bank savings account has very poor growth (e.g. 1%) but zero volatility - the 1% is a sure thing.
  • The stock market jinks and janks up and down 30-40% in a fun year - but in the very long term (20+ years), its growth is very certain and very good.

The people who make a science of studying long-term growth are the people who manage university endowments -- billions of dollars of capital whose job is to pay a dividend to the university of 4-7% per year, which then funds the university's operations. When you hear about a named professorship, that's because somebody donated something on the order of $5 million so the college could draw off $250,000/year to fund the professor, assistants, real estate he requires, etc.

Endowment money is not gambled; it is closely watched with high degrees of professional accountability and chain-of-approval. Every move must be able to be proven to be correct. Endowments are typically about 70% invested in the stock market.

As good as stocks are over 20 years, they are absolutely fantastic over 50 years. And arriving at middle age realizing I failed to save for retirement in my early years (an age-1 IRA was foolishly cashed in at age 25), I very, very much wish I had enjoyed 20 more years of the multiplying factor of the stock market. Had I not liquidated the $2000 IRA, 20 years later it would've been worth $19,487 - I was going to armwave $20,000, but decided to actually look it up.

So if you have the willpower to stick to the plan, I cannot emphasize enough the value of socking that money into a retirement account today, particularly whatever your government offers in a tax-deferred (like the US IRA) or tax-exempt account (like the US Roth IRA). Honestly, whatever plans you have for the money 5 years from now, will feel stupid when you are 75 years old and it's the difference between surviving and enjoying life.

Other than that, given the 5-year planning window, I would say that the stock market is a serious risk, regardless of the state of the market.

They say you're not supposed to think about the state of the market ("timing the market"), but my sense of the state of the market is high-flying free-market giddiness relating to the US president and his policies which are very favorable for short term growth (at risk of creating a bubble/boom-bust cycle), and right now it feels like we're right in the boom. Housing prices are spiraling upward, and there are 2-3 "For Sale" signs on every block of houses. It really feels like 2006. So no, not a good time to buy stocks for a sell in 5 years.

  • Good answer. I'd add that what one does also depends on where one is with the asset accumulation and on the age cycle. Being 20 with next to nothing is very different from having a nest egg at 65 that should last for the rest of your life. Risk aversion should take over as one gets closer to the latter. Jun 8, 2018 at 19:00

You do not say what you'd want to put the money aside for.

I'm answering: for your pension. Yes, that is far into the future, but just 3 days ago there was a column of financial advice in De Volkskrant saying you should put 10% of your income in a beleggingsfonds (via banksparen) toward your pension as soon as you can.

Google translate quotes:

Those who prefer to save need to invest a lot more. This is shown by the following calculation. Who now sets aside 1000 euros at 0.5 percent interest, will have 1200 euros in 37 years. The same amount at 6 percent interest yields 8600 euros after 37 years.

How much do you have to put on the investment account? As a rule of thumb: set aside 10% of your gross annual income for your pension. You can deduct the amount from your taxes.

Those who can not yet miss 10 percent of their income, take a lower percentage: 3 or 5 percent. Better something than nothing and what you do not have enough now, you can catch up later. Overtaking can be done up to seven years, via the so-called reserveringsruimte.

You can go to various investment institutions: the lowest costs for pension investments can be found at De Giro, Brandnewday and Binck bank. This form of saving is called banskparen.

  • Sorry for not giving that information. I was looking for ways to improve my overall net worth. After I'm done with school I would like to buy my own house around the € 200.000 range and have enough to establish a family Jun 8, 2018 at 12:51
  • 4
    That should be in your question.
    – user71981
    Jun 8, 2018 at 12:56

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