kati1337
2021-10-24 13:17:20
- #1
Hello everyone!
Our financial situation is currently somewhat in flux, and we are currently calculating what to do with leftover money at the end of the month once everything is settled.
Soon we will probably be in a situation where we have around 1500-2000€ left at the end of each month. Of that, we want to keep about half readily available (house reserves, vacations, modernization, and such luxuries), and invest the other half in capital accumulation. For simplicity, we are roughly calculating with 10,000€ per year.
I ran this through a few of my Excel sheets and, although one might have expected it, I was relatively surprised how "economically unprofitable" extra repayments are for a construction loan taken out in 2020. I calculated 3 scenarios:
The scenarios all of course have pros and cons. But putting everything into the construction loan seems very conservative to me. The amount of money I saved overall after the remaining 13 years could already be achieved on the market if the price increase was only about 1% annually. I believe the MSCI World has grown on average around 8% per year over the past 10(?) years.
However, putting 100% into ETFs is also risky because when the 15-year fixed interest period is over, we will need the accumulated money, but no one can predict what the price will look like at a specific time X. With ETFs one should think more long-term. Needing the money on a certain date is rather unfavorable.
Another idea was possibly to acquire a condominium and rent it out, and use the "throughput" minus reserves for extra repayments.
Which strategy would you follow / has anyone already thought along similar lines?
Best regards, Kati
Our financial situation is currently somewhat in flux, and we are currently calculating what to do with leftover money at the end of the month once everything is settled.
Soon we will probably be in a situation where we have around 1500-2000€ left at the end of each month. Of that, we want to keep about half readily available (house reserves, vacations, modernization, and such luxuries), and invest the other half in capital accumulation. For simplicity, we are roughly calculating with 10,000€ per year.
I ran this through a few of my Excel sheets and, although one might have expected it, I was relatively surprised how "economically unprofitable" extra repayments are for a construction loan taken out in 2020. I calculated 3 scenarios:
[*]100% into the construction loan as extra repayment (this is about the maximum we can repay extra annually)
[*]50% into the construction loan and 50% into ETFs (MSCI World)
[*]100% into MSCI World ETF
The scenarios all of course have pros and cons. But putting everything into the construction loan seems very conservative to me. The amount of money I saved overall after the remaining 13 years could already be achieved on the market if the price increase was only about 1% annually. I believe the MSCI World has grown on average around 8% per year over the past 10(?) years.
However, putting 100% into ETFs is also risky because when the 15-year fixed interest period is over, we will need the accumulated money, but no one can predict what the price will look like at a specific time X. With ETFs one should think more long-term. Needing the money on a certain date is rather unfavorable.
Another idea was possibly to acquire a condominium and rent it out, and use the "throughput" minus reserves for extra repayments.
Which strategy would you follow / has anyone already thought along similar lines?
Best regards, Kati