Special repayment or ETF experiences?

In your case, it is not about large sums, but you really have to know exactly what you are doing.

Example: When looking at ETFs, pay close attention to whether they actually trade the stocks and own them, or are merely the issuer of, in the worst case, worthless shares. There are ETFs and ETFs, most people don't know that. Keyword "full replication," you can Google that. Stay away from "synthetic replication" or so-called "optimized replication." There has not been a real stress test since ETFs were launched. The main argument for stocks, in my opinion, is that you own a share of a company; you own in case of doubt a piece of a Coca Cola shelf. Entire currencies can collapse and disappear, then you are quickly "out." The issuer can become insolvent; if there was no full replication, I am curious how that will end for the buyer. In short – look carefully...

We humans tend to only look at the recent years. One thing I can say for sure from experience and research is that there have also been "lost decades," where you waited 10 years for your prices to return to your entry point. It is not as risk-free as it has been presented for many years. Look at people who bought Telekom stock for over €100 in the hype around the new market, and where the price still stands today, 20 years later... and that is a blue-chip. Of course, you diversify through ETFs, no question, but in the end, it is not risk-free.

Then you have to realize that there cannot be endless, exponential growth. I fear we are at the end of a long spiral that will inevitably lead to a huge crash at some point. We are not talking about 30% here.

But stocks also have many advantages; otherwise, I would not do it myself. The important thing is always to be aware of the risks.

Concrete opinion on your situation: pay off the loan and only then invest in stocks, and only with money you can afford to wait 10 years for. I know many who thought they could "sit out" high losses; many of them eventually pulled the ripcord and sold with heavy losses.

General recommendation to everyone: never invest in risk assets with money you cannot really do without for a decade or longer, and ETFs clearly belong to that as well.

Good luck with your decision!

Even though this is not really the topic here, I somehow can't just leave the post as it is, because there is too much "German Angst" about the evil stock market.

On the one hand, a comparison between a global ETF and a single stock like Deutsche Telekom is a comparison between apples and oranges. Diversification is key. That is exactly why you choose ETFs with as many companies, industries, and regions as possible.

An index on which such an ETF is based changes regularly. Such a global ETF consists of more than 1000 companies. If the stock price of a company falls so drastically that the company is removed from the index, the value does not drop to zero, but it is replaced, for example, by the next largest companies. If a region collapses massively, then there are companies from other regions.
If a crisis hits an industry, there will also be crisis winners from other industries.
Of course, there can also be "Lost Decades." But these are usually regional, such as Japan.
Apart from how this affects our planet, the rising population on Earth, especially in emerging nations, will lead to increased consumption, and the largest companies worldwide will certainly profit well from this.

The big advantage is that you are a shareholder in many companies and not just a lender to a bank.

By the way, I made my first forays into the stock market in the late 90s. I experienced the crashes of 2001/2, the financial crisis, and the Corona crisis, and always held on. These were also always good times to invest more.

On one point, however, I agree with you: you should not need the money within the next 10 years.

Even though this isn’t really the topic here, I somehow can’t just leave this post as it is because there’s too much “German Angst” about the evil stock market mixed in.

However, I agree with you on one point: you shouldn’t need the money within the next 10 years.

Accepted, but “German Angst” about the stock market should by no means fuel that. I have actually made most of my money in life through contrarian actions. Most recently, when Corona hit, I massively invested in stocks like Allianz, Munich Re, etc.... and you make most of your money with your backside, sorry.... but that’s the truth. The only constant on our side as small investors is time; it always works in our favor.

I was more concerned that people understand what kind of financial instrument they are investing in, because ETF is not just ETF, especially regarding replication. That’s all I wanted to say. If someone sees it differently, that’s their right. ETFs have never been put to the test; there was no financial crisis where issuers could have become insolvent, etc.

If the comparison with Telekom may be shaky and you mention diversification, that’s of course true. But at the end of the day, that doesn’t change the fact that people might have said the same things about Telekom in the early 2000s. Nobody could have imagined Telekom falling by 90%. Today we are smarter, but an event like the Nemax collapse still happened and ETFs simply haven’t undergone such stress tests yet, and if they don’t replicate properly, it can go very badly. I don’t know the next black swan, you don’t either....

But that’s just my opinion and it may be wrong.

Ultimately, an ETF is just a low-cost special form of an equity fund. If you invest in a Dax equity fund, the fund manager can only invest in stocks from the Dax and must maintain an investment quota of, for example, at least 80%. They cannot completely exit or shift externally. The only thing they can do is choose a different composition than by market capitalization as with the Dax ETF. Therefore, during a market crash, an ETF will not behave much differently than an equity fund in the same investment spectrum. And equity funds have existed for a long time and have already experienced several crashes.

To my knowledge, ETFs have also existed in the USA for a long time, just not in Germany.

PS: The Dax was only intended as an example and does not count as diversified for me as a single instrument.