Investing €800,000: Annual Returns by Asset Class

€800,000: From a 3% Deposit to Gold’s Claimed 8%

An €800,000 windfall raises a persistent question: can it allow you to quit your job? The scenario begins with a confessed fantasy—"I dream daily of winning this in the lottery"—and quickly turns into a profitability table. Because the issue isn't the money, but what to do with it. The figures debated range from 3% annual interest on a deposit to the 8% attributed to gold, and all disagreement lies in that gap.

How much does investing €800,000 yield annually?

The first figure is the most boring and safest: a 3% deposit on €800,000 produces €24,000 per year, always before taxes. Using an entity paying 3.65% as a reference, the calculation rises to €29,200 annually. These amounts don’t cover luxuries, but they do cover basic expenses without surprises.

The second scenario involves precious metals. With an average annual return of 8% claimed by supporters, €800,000 would generate €64,000 net profit each year. Even in a bad scenario, with 4%, it would be €32,000 annually. The key argument is to sell when prices rise and wait patiently when they fall. The detail no one fully resolves is how long one must endure that wait.

The third path is real estate, with widely varying figures depending on location: €3,000 per month with two apartments in Madrid, €3,750 with eight units in poor neighborhoods of other cities, and €5,000 with a mix of ETFs and metals. The complete comparison, including required capital in each case, yields a result that does not particularly favor property investment.

Gold’s fine print: 0.6% real return since 1802

Here comes the cold shower. Measuring gold in nominal euros is misleading: if something rises 8% annually while the currency loses purchasing power, much of that gain is inflation disguised as profitability. The figure presented is devastating: gold’s real return adjusted for inflation since 1802 is 0.6%, with compound inflation of 1.4% over the entire period.

Timeframe matters. During the gold standard, inflation was virtually nonexistent; it was after abandoning it that money began to devalue sustainably. Metal defenders counter with another advantage not shown on graphs: counterparty risk. Holding physical metal, they argue, is the only way to sleep well when other assets depend on intermediaries.

There is also a fiscal temptation lurking. Some boast that buying and selling gold and silver outside banking channels means tax authorities won’t notice. It is worth remembering that this is not an investment strategy, but something else, and those who sell €800,000 worth of metals rarely achieve the paper-promised returns.

Real estate isn’t free

Buying eight apartments in poor neighborhoods consumes the entire €800,000 and, if neglected, another €200,000 for renovations, unpaid rents, and expenses. In exchange, there are those €3,750 monthly and the hope—not certainty—that property values will rise over time. Apartments also lose value, and when they do, they do so with tenants inside.

Against this, the middle ground: two apartments in Madrid, €3,000 monthly net income, and far fewer headaches. A mix of ETFs and metals, on paper, yields more with less management. At the opposite extreme appears the crypto route, with some claiming 40% returns in a couple of months. Such profitability is cited as an argument, never as verified data.

Staggering entry: What is DCA?

When a plan finally exists, the second debate arises: how to enter and with what allocation. A common approach proposes diversifying among real estate, global equities via MSCI World, fixed income with hedged currency, and gold through ETCs. Another is more opportunistic: hold cash until the next crisis, then go all-in on MSCI World.

The most specific criticism targets staggered purchases. Spreading entry over two years is considered a major error: more than six months would be inefficient in over 90% of historical cases calculated using moving averages, and above eight months in over 95%. For a standard profile, a 70% equity / 30% fixed income split is proposed, the efficient frontier cited by Bernstein and Malkiel. As a textbook reference, the portfolio Warren Buffett prepared for his vvife: 90% in the S&P 500 and 10% in money market funds.

Can you stop working with €200,000?

The question shifts to the other end. With €200,000, a paid-off house, passive income, and an austere life, without partner or children or burdens, some argue you can already quit. The immediate response is that this isn’t a financial plan, but a lifestyle, and everyone adapts to their current income.

With projected inflation, that capital falls short for almost any other profile. Younger, less austere individuals don’t see it as sufficient even with €800,000. And the uncomfortable figure lies elsewhere: many workers earn about €15,000 a year working ten hours a day, it is claimed, yet they are told €35,000 isn’t enough to live on. Regarding pensions, it is noted that currently a minimum of 36 years contributed is required.

And one last figure, with name and date: the ADIF bond at 10.5% maturing October 19, 2024. A 10% annual return exists. Whether it is safe is, exactly, another conversation.