I'm a single man in my mid thirties living in Spain. In 2019 I saved around 900€ per month on average after taxes. Most of that went to pay some one-time taxes and the rest to an emergency fund. Now I feel like my emergency fund is enough, so I would like to invest this extra money somehow.
I have an emergency fund of about 2 months of expenses. In the case I lost my job (not likely, but who knows what could happen) I have right to unemployment subsidy that would cover like 50-60% of my current monthly expenses, and that without considering I would cut some of them in case of unemployment. I'm a software developer so, given the current job market for those, I would expect to find a new job in less than two months.
I have a mortgage, 95k still to be paid at a fixed rate of 500€/month for almost 18 years. Interest is 2.1%. Early payments are free of charge.
Possible big expenses
- I'd like to change windows on my appartment. I would expect this to be around 5k€. By doing this I would improve energetic efficiency of the house and expend less on heating/cooling.
- I'm considering buying a parking spot in some garage. I own a car and currently park it on the street, but I started having some problems (car got hit a couple times while parked without any note of the hitter, someone stole one of the outside mirrors, etc). By the little research I made this could cost around 10k. Also, since this is considered real estate I could be able to add this to my mortgage, but I would need to talk to the bank first.
Now I have to decide what to do with this monthly leftover money. I don't want it to be sitting on some bank account. I'm thinking about putting some fixed amount (400 or 500€) towards a fund to change the windows and put the rest into some kind of long term investment.
My gut tells me to pay the mortgage early, since I don't like debt at all, but I realize that could not be the best option for long term savings.
What would be the way to maximize the long term savings in this situation?