DCA Investing Guide for Europeans
EUR currency risk, ECB rates, inflation hedging, and which ETFs to use
Most investment advice is written for US investors in USD. European investors face different challenges: negative interest rates, EUR/USD currency risk, higher inflation sensitivity, and a different ETF landscape. This guide covers what a EUR-based DCA investor needs to know, backed by 20 years of real data (2006-01 to 2025-12).
The EUR Cash Problem
The most important fact for European investors: cash is not safe. Over 20 years, 100% cash lost -21.6% in real (inflation-adjusted) terms. Even a EUR money market fund tracking the ECB overnight rate lost -14.5% real.
What Happened
- 2014-2022: Negative ECB deposit rates. The ECB held rates between -0.10% and -0.50% for eight years. Your cash was being charged just to exist.
- 2022: 8.4% Eurozone inflation. Combined with still-low rates at the start of the year, EUR cash lost purchasing power at its fastest rate in decades.
- Even the "conservative" portfolio of 10% MSCI World / 90% money market lost +3.8% in real terms. You needed at least 20% in equities just to break even with inflation.
The Minimum Allocation to Beat Inflation
| Portfolio | Real Return | Max Drawdown |
|---|---|---|
| 100% Cash | -21.6% | 0.0% |
| 100% Money Market | -14.5% | -2.8% |
| 10% World / 90% MM | +3.8% | -4.1% |
| 20% World / 80% MM | +22.1% | -7.3% |
| 20% World / 10% Gold / 70% MM | +41.8% | -6.0% |
Compare these in our calculator
The sweet spot for conservative EUR investors is 20% MSCI World + 10% Gold + 70% Money Market. This mix beat inflation by +41.8% over 20 years while keeping max drawdown to just -6.0%. Without gold, the same equity exposure only returned +22.1% with a -7.3% drawdown.
Gold as an Inflation Hedge for EUR Investors
Gold returned +259.4% in nominal EUR terms over 20 years via DCA, comparable to the S&P 500 at +390.0%. But gold's real value for EUR investors is not raw return, it's the diversification effect:
- When equities crash, gold tends to hold or rise. Gold's worst unrealized loss was just -2.6%, compared to -37.5% for MSCI World.
- When the dollar weakens (hurting your USD equity returns in EUR), gold tends to rise, partially offsetting the loss.
- Gold's real return of +181.9% over 20 years comfortably exceeded cumulative inflation.
Adding just 10% gold makes a measurable difference. Compare 20% World / 80% MM (+22.1% real, -7.3% drawdown) with 20% World / 10% Gold / 70% MM (+41.8% real, -6.0% drawdown). More return, less risk.
S&P 500 vs MSCI World for EUR Investors
The most debated question for European investors. The S&P 500 is 100% US stocks in USD. The MSCI World covers developed markets globally (~70% US).
| Index | Nominal Return | Real Return | Max Drawdown |
|---|---|---|---|
| S&P 500 | +390.0% | +284.3% | -46.8% |
| MSCI World | +242.7% | +168.8% | -48.8% |
Compare these in our calculator
The S&P 500 has outperformed MSCI World significantly in EUR terms over this period, driven by the dominance of US tech companies. MSCI World offers slightly less USD exposure (~70% vs 100%), but the return gap is large.
If USD concentration is a concern, a better hedge than switching to MSCI World is to add gold. A 70% MSCI World / 30% Gold portfolio returned +172.7% real with only -24.5% max drawdown. For the full comparison, see our S&P 500 vs MSCI World guide.
Practical DCA Setup for EUR Investors
- Choose a broker. Trade Republic, Scalable Capital, DEGIRO, and Interactive Brokers all support automated monthly ETF purchases in EUR.
- Set your allocation. A good starting point is 20-30% equities, 10% gold, and 60-70% money market. Use our calculator to test different mixes.
- Automate monthly purchases. Set up standing orders to buy on the same day each month. Most EUR brokers support this natively.
- Rebalance annually. Once per year, check if your allocation has drifted. Sell overweight positions and buy underweight ones to restore targets.
Key Takeaways
- Cash is not safe. Cash lost -21.6% real and money market lost -14.5% real over 20 years. You must invest some portion in equities or gold.
- 20/10/70 is the minimum viable portfolio. 20% MSCI World, 10% Gold, 70% Money Market beat inflation by +41.8% with only -6.0% drawdown.
- Gold is essential for EUR investors. It hedges both equity drawdowns and USD currency risk. See our gold DCA guide.
- S&P 500 beats MSCI World. +390.0% vs +242.7% nominal over 20 years.
- Automate everything. DCA works best when you remove yourself from the decision-making process.
Ready to build your EUR portfolio? Use our free DCA calculator with 20 years of real EUR data to find the allocation that matches your risk tolerance.
Frequently Asked Questions
Is cash safe for European investors?
No. Cash lost -21.6% in real terms over 20 years (2006-01 to 2025-12), and even EUR money market lost -14.5%. The combination of negative ECB rates (2014-2022) and Eurozone inflation eroded purchasing power significantly. You need at least 20% in equities to beat inflation.
What is the best DCA portfolio for EUR investors?
Based on 20 years of data, the minimum viable portfolio is 20% MSCI World / 10% Gold / 70% Money Market, which beat inflation by +41.8% with only -6.0% max drawdown. For higher returns, 30% MSCI World / 10% Gold / 60% Money Market returned +60.1% real with -8.6% drawdown.
Should EUR investors hedge currency risk?
For long-term DCA (10+ years), explicit currency hedging is not recommended. Monthly investing naturally averages out EUR/USD fluctuations. Adding 10% gold to your portfolio is a more efficient currency hedge, as gold tends to rise when the dollar falls.
Which broker is best for European DCA investors?
Trade Republic and Scalable Capital offer free automated monthly ETF savings plans and are the simplest choice for EUR DCA. DEGIRO has a wider ETF selection with free core ETFs. Interactive Brokers offers the most comprehensive features and lowest margins for advanced investors.