Special repayments or investing in the market? Alternatives?

Early repayment simply does not pay off with interest rates below inflation.

I have to disagree here. Inflation devalues not only the debt but also the accumulated capital equally. So it makes no difference whether I repay today or in 30 years.

The only thing that really makes a difference is the interest rate differential.

I have to disagree here. Inflation not only devalues debt but also the accumulated capital equally. So it makes no difference whether I repay today or in 30 years.

The only thing that really makes a difference is the interest rate differential.

If inflation is, say, 2%, the borrowing interest rate is 1.7%, and I instead invest the extra payment in an ETF or a dividend stock generating 6% return, my wealth still outpaces inflation by 4%. So even if I repay completely in 20 years with profits plus saved capital, I am still ahead of inflation.

I told you, because of the interest rate differential. The same applies with deflation. Therefore, from the perspective of whether to repay or invest, it is completely irrelevant how high or low or even negative inflation is.

I told you, because of the interest rate differential. The same applies to deflation. Therefore, from the consideration of whether to repay or invest, it is completely irrelevant how high or low to negative inflation is.

Yes, seen from that perspective, you are right.

If you consider it without investing the capital surplus, it is true again: as long as the nominal interest rate is below inflation and with SZB as long as the total term, making an extra repayment makes no sense. Either consume the amount or invest in products with an interest rate differential to inflation and later make extra repayments or refinance.

Stocks have a dividend yield of 7.6% and ETFs also rise in the long term. Either the loan runs for 30 years and inflation supports us additionally. Prepayments simply don't pay off at interest rates below inflation.

That is certainly inaccurate in a general sense. If everything (ex-post) goes well, it may be okay to keep the debts for longer. But that is quite risky over 20 or even 30 years. You don’t get a dividend yield of 7.6% without risk, especially not over 30 years. This strategy is a bet and not a sure thing. The old-fashioned rule that nothing is better than investing in paying off debt has survived many ups and downs. As a private individual without much extra money, I would proceed very defensively and at least consistently maintain the necessary high repayment rate (3%+) for a low-interest period.

That is certainly inaccurate in a general way. If everything (ex-post) goes well, it may be okay to let the debts run longer. But doing so for 20 or even 30 years is quite risky. You don’t get a dividend yield of 7.6% without risk, especially not over 30 years. This strategy is a bet and not a sure thing. The old-fashioned rule that nothing is better than investing in paying off debts has already weathered some ups & downs. As a private individual without much disposable money, I would be very cautious and at least rigidly maintain the necessary high repayment (3%+) for a low-interest period.

In my or our example, I said that we have 30 years fixed interest rate (SZB) and our payment is below a comparable rent. Furthermore, our nominal interest rate is below the rate of inflation. In this respect, the advantage of ongoing inflation for us increases with each additional year of repayment, since the loan payment remains the same for the next 27 years but salaries will increase. After 10 years of fixed interest, I look to see if the nominal interest rate is below my current one and refinance at the same payment, which shortens the term. Or I check whether after 10 or 15 years I can make special repayments with gains from my investments during this time (taking profits). If the markets are down, I simply don’t have to act.