How to Manage your portfolio(Bank Accounts) before you even start to Invest your money?#

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source: https://www.finanzfluss.de/

This picture summaries pretty good how you should build up safety before you hop into the deep waters!

But this picture doesn’t answer every question and its German so let me help you with that, there are a ton of account-models like this one but this one is in my opinion the best

First of all we need some translation

Gehalt: Income

Ausgaben: Expenses

Girokonto: In Europe this is a common basic bank account(normally without interest)

Tagesgeld: This is any given account with some interest(this is not important) where you put your “Emergency” money like 3x your salary when money is tight

Festgeld: This is an account with the most interest in your country this doesn’t have to be your Main account

Depot: Like Robinhood, or in Europe TradeRepublic or Scalable this has to be where you can purchase Stocks or in my case ETFs

How should your money move?#

First of all you get your paycheck on your First Girokonto 1 this is you Main account and the only account where you may spend your money But first you should always pay yourself! like when you get your paycheck you already need to have an automatic system(Most Banks support this!) to get some money onto your Girokonto 2, Festgeld and Depot. How much? that depends. You should always look these accounts like your short term wants(1-3 years), medium term wants(5-6 years) and long term savings(10-20 years)

IMPORTANT
I say wants and savings because the most important account is your depot(investments) because with the power of compound interest you will gain the most money on this specific account the other two is for your “fun” in this process. Imagine if you save for 10-20 years, but you don’t buy anything just save everything, after a while you won’t even make past 3 years or less before you give up. You should always have some wiggle room where you can spend your money on things you don’t really need but you just “want” them. To stay focused on the long term gains you should have a little fun, but not too much to not save anything

I haven’t really talked about Tagesgeld or “Emergency” money, but it’s the most important one, you build this one first before everything, this account is important if the stock or ETFs prices fall really hard because you can buy back cheap but actually the main purpose of this account is so you don’t need to get your money out of the 3 other accounts before you even make some money if you really in the emergency

TIP
As you can see there are a lots of accounts you have to make but does that mean you really have to open 5 different account? the short answer is yes, but not always it really depends on how the laws work in your country, but it’s better to diversify between 5 accounts. One bank won’t give you the best in all 5 options you need in this case, and you won’t need to search hours to find one with all 5 options just find 5 different but the best in their thing so you don’t have to compromise