Special repayments or investing in the market? Alternatives?

I would try to diversify as well as possible.

Nowadays, you can achieve a good 6-8% on the stock market without much risk through ETFs – in my opinion, this should definitely be taken advantage of if you have money left over! No advisor is needed for this either, who would take another 4-5% from you.

Nevertheless, we will also handle it in such a way that we try to repay the loan (we have split our mortgage accordingly) with the lowest interest rate as quickly as possible – including special repayments, so that the risk of potentially increased interest costs in the future decreases somewhat.

I just consider the special repayment after 15 years with the saved money in the form of ETFs very risky... If your fixed interest period expires and the interest rate in 15 years is at 5%, but the stock market with the ETFs is not yet profitable enough to pay off, you have a problem...

The fact is:

Make special repayments as much as possible --> no problems with any stock prices, payments from ETFs ---> What is gone is gone – debt at the bank decreases

ETFs --> more return, economically certainly more "sensible," but more risk or problems that can arise afterward.

Ultimately, you have to feel comfortable with the decision... It also depends on the "type of person." If you are more security-oriented, then I would put significantly more money into special repayments. If you are more in the finance guru area, then I would invest a decent sum.

If we find ourselves in a recession at the end of the fixed interest period in 10/15 years, the likelihood that the interest rate level is low is very high, and you can continue financing cheaply.
On the other hand, if there is a boom and the interest rate level is correspondingly high, a lucrative sale of the ETF and a final special repayment (SoTil) is possible.

There is actually some truth to that, I had not seen it that way before.

We have set all our repayment rates as low as possible and initially put €750 and later €1,500 per month into the MSCI World.
If you have a healthy attitude towards risk, you do quite well with this strategy.
Of course, you can also mix, for example allocating 60% of the surplus to annual special repayments and the rest into an ETF fund savings plan.

Yes, that is the big question. I believe we want to use ETFs or similar market-tracking investments, I am now fairly certain about that. Many people here do. Just how to distribute it, I don't know yet. We are currently repaying the usual 2%. Putting part of the surplus into special repayments would be an option, because less risk through lower residual debt. But if I calculate it, of course every euro in special repayment is less economical than in the ETF.
I currently tend towards 30% special repayment and 70% ETF. I'm still not sure about that.

That's exactly what I find so dangerous. You’re not playing with spare money you have anyway. And if the MSCI World is so great, then I just take everything I have, throw it in there and never work again (-;

You could theoretically do that if you manage to stay afloat somehow while the money "works" in the market.
No matter if you actually have that money left over as savings at the end of the month, that still doesn’t make it spare money. At the same time, you’re not really "gambling" like in a casino when you invest in the MSCI World. The crashes you can see on this ETF over time are not random lows, they are some kind of global (financial) crises. For example, the crisis of 2008 or also 2020 with Corona. You see deep drops in the price then, but the MSCI World has always recovered quickly. The only problem is if you NEED your money EXACTLY during such a drop and have no option to wait until the price recovers.

We repay 2% (€2210) and invest the difference to 3% (~€750). Fixed interest period is 15 years. Also Team A1JX52 (until A2PKXG becomes worthwhile).

I’ll take a look at those. Investing the difference to 3% also sounds like an interesting idea. I will calculate that.
We are considering buying another property to rent out. Not right now, but if our income situation improves further in 1-2 years, we could easily afford that.
Do you have a lot of work with the rented apartments?

Briefly for understanding: "As low as possible" means for us paying off without special repayments via the regular repayments until retirement. Everything else through the ETF is then a bonus.

That’s the same for us. We would also be done by retirement without special repayments if the interest rates for the follow-up financing don’t explode, but with special repayments significantly faster. And who wouldn’t want to be debt-free earlier. ;)
If the market goes really well, we could even reduce the residual debt by a large part at the end of the term.

But you still have to pay about 25% capital gains tax on the ETF’s capital gains. Also, the past is past and the future is future. Meaning, drawing conclusions from past data to the future can be dangerous…

The tax part is correct of course, but even after taxes ETFs currently perform significantly better than anything you find as fixed investments.
To infer from past to future is the only possibility we have on the money market.
No one guarantees that real estate will keep its value. Or that the euro remains a currency at all. Or that World War III doesn’t break out before your fixed interest period ends.

I just consider the special repayment after 15 years with the accumulated money in ETFs very risky... If your fixed interest period runs out and the interest rate in 15 years is at 5%, but the stock market with the ETFs is still not profitable enough to pay off, you have a problem...

That’s exactly the question – do I really have a problem then?
ETFs aren’t a cake that’s finished at a certain time X. Prices normally rise relatively steadily. You can sell the shares anytime and get your money back minus taxes. It’s just unfortunate if you want to do that while, for example, a Corona pandemic has thrown the entire world into crisis and the whole WORLD market has tanked. Then the portfolio might be worth significantly less than a year ago. Such situations – as history shows – recover quickly again. But if you have to access your cash in a crisis year, then you really do have a problem.
One option would be to do a follow-up financing with a short term and withdraw the money from the portfolio as soon as it has recovered somewhat. Or not to do that and withdraw the money with lower returns from the market. That would have to be decided then.

You really only have a risk with money you invest in the world market if the world market as a whole collapses. But I believe the consequences of such an event would go FAR beyond my poor little house in Ammerland. What political and general consequences that would have, who can estimate?

I think here it’s assumed that such an ETF always performs positively on average... Thought the same about Telekom back then...
But it can also crash.

As said – I believe if a representation of the "world" market overall crashes, then we globally face problems that make my house financing look very insignificant.
Telekom is a single stock. I would never invest my money for my retirement in a single company. In world ETFs you invest usually in thousands of companies.

For taxes, the annual saver’s allowance must be taken into account first. At the end of the year, quickly sell and buy again until it is fully utilized.

Otherwise, I share the opinion of investing in ETFs, although I still personally make a smaller additional repayment. It just feels better.

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Otherwise, I share the opinion to invest in ETFs, although I still make a smaller part of prepayments myself. It just feels better.

Prepayment is quite a low-risk "investment," but it does not apply to us. We have a part of the (household) surplus in ETFs, a part in selected individual stocks. With some luck (!) it can be worthwhile – see Tesla and Nvidia in recent years (not a recommendation to act). Short-term liquid funds are also available. I would advise against renting out.
There will be no general answer to that ...

The question of stock ETFs or special repayments depends on your personal risk appetite. Financially speaking, it is an interest rate differential transaction in which many professionals such as hedge funds or large banks have also speculated unsuccessfully. Fundamentally, capitalism of course ensures that companies experience value growth of about 4 to 6% in the long term. The 8% of the last ten years is historically an exception – there is also discussion about to what extent companies are "expensive / highly" valued and to what extent low interest rates play a role. Rising interest rates can also mean lower stock prices because "safer" investments become relatively more attractive, and at the same time the leverage for companies becomes more expensive, so that the return on equity decreases.

If you had needed the money in the MSCI World ETF in 2003 or early 2009, you would have had a problem. If you become unemployed or unable to work, you are also better off with the special repayment.

Therefore, despite all temptations, I would put at least 50% into the special repayment.

Financially speaking, it is an interest rate arbitrage, in which many professionals like hedge funds or major banks have also speculated unsuccessfully.

Exactly. If you take the game even further, you could take advantage of those heavily advertised 0% loans, invest everything in ETFs, and simply pocket the profit on the stock market on the side.

If you had needed the money in the MSCI World ETF in 2003 or early 2009, you would have had a problem.

Or in 2020, at the beginning of the corona pandemic. That hit me a bit and cost me a good amount of money. Bills had to be paid, sitting it out was not an option.