Special repayments or investing in the market? Alternatives?

Very interesting topic! I am currently dealing with it as well.

Two years ago, we took out a construction loan of 350k. Fixed interest rate for 15 years, 1.86% interest. We started with a minimal repayment of 2%. Annual special repayments of up to 17k are possible. Without special repayments, there would be approximately 230k remaining debt after the fixed interest period for follow-up financing.

During/after the house construction, we left a large buffer in the instant access savings account for upgrades, garden, major purchases, etc. Now everything has settled, and I wondered what to do with the buffer.

In the end, we have now fully used the 17k special repayment for the first time. I have also dealt intensively with the topic of ETFs and came to the conclusion that I wouldn't have been the type for such a large lump sum investment. Of course, we still have an emergency fund of about 5 months on the instant access savings account.

Regarding the question "special repayment vs. investing," I have decided to spread the risk. A small part of our savings rate (50-100 EUR) will now go monthly as a savings plan into the Vanguard ETF. The larger part (about 200 EUR) goes every month into the special repayment / maintenance reserve. I would not describe myself as very conservative and I also like dealing with the stock market and understand the products, but the risks of interest rate increases and many unforeseeable things in the future remain in the back of my mind.

I think our allocation is the perfect compromise for us between conservative thinking and taking advantage of the possible returns of the ETF.

We are taking a two-track approach and making both special repayments and deposits into the portfolio (ETF & individual stocks). This works best for us. I just checked: the allocation in 2021 was 62% to the special repayment, 38% to the portfolio.

Just as most people here describe it, we will probably handle it that way too. Partly special repayments, for risk minimization and sleeping better at night, and partly investing in ETFs for better returns. I don't know yet how we will split that percentage-wise. Slowly but surely, the end of the absolute interest rate low is becoming apparent, at least according to the news. So at least my relevant finance magazine in white/blue suggests that, and I believe the American central bank also intends to counteract because inflation is slowly getting out of control for them. But I have to admit that I don't understand much about this. I've just heard it from various sources recently.