Special repayments or investing in the market? Alternatives?

So when we were building, a general contractor who was among the final candidates suddenly became available because a madam had invested her equity in solar - and then it was gone.....the equity. Well.

As soon as it was clear that we would secure a reservation for a plot of land, the equity was liquidated and subsequently held in the overnight money account (>12 months).

We are currently paying 2.29% interest - unfortunately, at the end of 2019, there was a "peak interest rate," and we wanted to finance with the house bank. We have already made multiple special repayments and also have the option to repay beyond the 5% special repayment within the next 2 years (a one-time repayment that we had written into the contract).

What do you think? Pay off everything we can afford to spare, or invest in stocks instead? So far, we have kept everything in our accounts, but with the current inflation, it really feels like throwing money away.

Or maybe split it?

I understand that this exact topic is being discussed here right now, and I have read everything. However, for most people here, we usually talk about interest rates in the low 1.x range. That must be quite a difference.

For most of us here, we are mostly talking about interest rates in the low 1,x range. That should already be a difference.

Whether you pay interest at 1,x or 2,x is not much of a difference yet, if you intend to achieve a return of 6% or more (before tax) with stocks for yourself.

After the whole thread, I still stick to this: Divide it somehow in the way that lets you sleep best.

I would split it. Pay off 5% early and invest the rest in the stock market. But it also depends on how high your remaining debt is. The higher the remaining debt and the lower the fixed interest period, the riskier the whole thing becomes. Then I would pay off more early. Ultimately, it always comes down to your own risk tolerance. Personally, I don't feel comfortable with high debts, even though I rationally know that probably paying off less early and investing more in ETFs would be more profitable. But that's only probably...

Whether you pay interest at 1.x or 2.x is not such a big difference when you intend to achieve a return of 6% or more (before tax) with stocks for yourself. I still stick to my view after the whole thread: Somehow divide it in a way that allows you to sleep best.

Alright, but you have to pay almost 30% tax on the earnings from the stock market, or did I misunderstand that? In the end, 1% on the interest burden does make a difference. But basically, I still agree with you. We actually wanted to invest at the beginning of Corona because I was sure it would go up quickly again... we didn't do it because we didn't have a depot and then said "oh well – we can also make special repayments". Well, that was pretty stupid. There would have been profits of almost 100%. Now we are facing the question again and are so incredibly undecided.