Referring now to the interest rate from an example calculation where I wanted to show you that your calculation is completely wrong is just ridiculous. You have to calculate with something, and 5% is not that unreasonable. But it doesn’t even matter as long as the after-tax return is above 1.6%*. I could have also calculated with 2% or 3%. The result that the [TA loan with ETF] would have outperformed the annuity loan would be the same, only the difference would be different.
*deviating from the simplified example, a note on this: Due to the intra-year compound interest effect on the annuity loan, the break-even point should not be exactly at 1.6%, but somewhere 0.01 to 0.02% above that.
Of course, the stock market is not a one-way street and it’s all risky, and it’s certainly not a financing method one can recommend as standard. Exactly for this reason, I also said above that it’s nonsense to do this if the financing is already maxed out. But if, as asked by the [TE], the loan is already secured anyway and it is only about €50,000, then you can certainly take the risk. If you look at the return triangle of the DAX, for example over 10 years, then with over a 90% probability you would have easily beaten the 1.6%, and the after-tax return of 5% that I indicated above would have been reached at least 80% of the time. In 15 years you would have always beaten the 1.6%. Of course, this is no guarantee for the future, but if you don’t want to be exposed to any risks, then you shouldn’t go out into the street anymore.
PS: In case someone recalculates, I just realized that I have even positioned the annuity loan better. I calculated with 1.5% instead of 1.6%. The difference after 10 years would therefore not be €16,000 but €19,000. By comparison, with a 3% after-tax return of the ETF, the advantage would still be over €9,000.