Where to put money? Long-term financial planning including real estate

I would advise you to anonymously buy 1 OZ gold investment coins. They have a very high value density, are mobile unlike real estate, and have many other advantages.

Have fun trying to buy a car or even a house with coins. The question will quickly arise where the money comes from, and then back taxes will be charged. I recommend (as so often) simply investing in broadly diversified ETFs. If you want to play landlord, then several residential units at once. But whether that yields more return than ETFs... people can calculate and argue about that for a long time.

There is a wonderfully lively discussion here :-)

In order to economically rent out an apartment at 3-5% interest, prices have to return to the old multipliers. That means 15 annual rents or so instead of the current 30-50 annual rents. But that would imply a corresponding loss in value and I doubt that appropriate properties will come onto the market.

Yes, buying an apartment makes sense above all because of the exemption of the appreciation from capital gains tax (a pretty arbitrary advantage) with a long holding period. If a stock increases its nominal value with inflation, I have to pay 25%, even though I have no real gain. This does not apply to real estate. However, at the moment I am not able to simply convert this into a difference in yield. At current valuations and with current tenant legislation, however, it is not terribly attractive. At least the valuation can go down again, let's wait and see.

One could also buy a 4-room apartment for the kid in a university town and let other flatmates pay it off.

Not a bad thought at all, but renting to shared flats involves quite a bit of effort due to many changes etc.

a) How did you pay off the house so quickly? Even if it only cost 500K, you earned 600K in that time (house plus your now still 100K)

b) What prompts parents to bequeath something early? Don’t they need the money themselves?

The sideline activity can bring unexpected distributions. And before building the house we were extremely frugal, sometimes actually living on an insanely low spending level. Was that completely rational in hindsight? Probably not, but we do not feel we actually missed out on anything. We were simply raised to be frugal. An annual savings sum of 80k combined with some investment return is enough. As I said, not completely rational but we knew nothing about the impending generosity of relatives before building.

I would invest in a plot/parcel where others go on vacation.

A holiday home far away is rather not for us. But a leisure plot nearby could be something in old age. Currently we do more sports and especially with the kids, so you don’t need something like that yet.

If you also have so much left over that even a second account is necessary, then maybe one should consider those in need as well.

The second account was not expensive at all, and it’s not really millionaire problems like “my garage is too small for the third Ferrari.” Here in the village, by the way, every second farmer is much wealthier, thanks to generous land zoning. They don’t drive Ferraris or Porsches either. Donations are of course part of the whole, but passing something on to the children and having a worry-free retirement is at least as relevant.

With the paid-off house, virtually nothing can happen to you anymore. So why amass as much money as possible? Even with less income, you will certainly be able to support your children adequately.

True, but slowing down in your mid-thirties? It’s not even primarily about hoarding money, the work is actually in an area that is extremely intrinsically motivated. Finding the balance with the children is of course the most important conflict of goals at the moment.

Yes, buying an apartment makes sense above all because of the exemption of capital gains from the final withholding tax (quite an arbitrary advantage) after a long holding period. If a stock increases its nominal value with inflation, I have to pay 25% even though I have no real gain. With real estate, this does not apply. However, I am currently not able to simply convert this into a difference in yield.

You are putting the cart before the horse. First comes the yield, then the tax optimization. Not least because tax laws change regularly and you will certainly experience 4-5 major tax reforms in the 30 years until retirement. This arbitrary tax exemption for certain asset classes can quickly disappear. And as a landlord, you also expose yourself to other arbitrary legislation that destroys your yield, such as rent control or caps and the participation in tenants’ heating costs as examples from recent times. Small-scale letting is a business with relatively low diversification, both in terms of the number of properties and geographically. And compared to other investments, it is also labor-intensive.

By the way, this financial situation occurs more often than you think. Or do you believe we tell people we know that the house is paid off? And of course you complain together with the neighbors about high construction costs and the house is not a mansion either. But nothing is missing that we really regret afterwards. There was once the "I regret that my kitchen doesn’t have an aircraft carrier" thread here ;-)

Maybe you wait a bit until you can buy plots again without building obligations etc. and buy something for your children in the meantime?

That would actually be a sensible plan. Although if you take a plot away from others for over twenty years, who perhaps now have small children and want to build. Our search for a plot was frustrating enough. Before there are free plots in this area again without a tough struggle and without building obligations, demographic change has to progress significantly. Nevertheless, the idea is worth considering.

True, but already slowing down in your mid-30s? It's not even primarily about making money, the work is actually in an area that is extremely intrinsically motivated. Finding the balance with the children at the moment is of course the most important conflict of goals.

I imagine you would also speak such fluent and razor-sharp dirt bingo at home. :D Sorry, the quoted passage is really terribly expressed, I think.