My situation: mid-fifties. An insane divorce several years ago reduced my net worth by a great deal. I changed states, retired at 55, and met somebody new. My pension -- which I live off of -- is $2600 monthly plus an excellent health plan. I have $200,000 in a federal IRA (the TSP); €120,000 euros in my bank account. I live in Germany although I am an American. (My fiance has a ten year old child we decided to return to live in Germany which is far cheaper than in the United States and plan to reside here for ten years, at which point we will move to the -- also very cheap -- southwest of France.)
I currently pay €1200 a month for a large, beautiful villa on a large plot of land in the countryside. We have a well so water is super cheap. We pay electricity but it's not so bad and heat with wood and some LPG -- about €2000 annually total. We will be here for ten years so am thinking although it's nice it's essentially 1200 x 12 months x 10 years.. A lot of money spent.. We could buy a smaller house in town for around €200,000 euros. Monthly payment would be about 600. Interest rate is 2.8 percent. Water would be slightly more expensive, heating slightly less. I suspect the house we're looking at would appreciate slightly in ten years (maybe ten percent) but not by much more than that. But I am an American in Germany and they want a fifty percent down payment. With transaction fees and taxes that amounts to around €110,000 euros.
So here are my options, it seems to me:
-- Downsize to the smaller house, pay the huge down payment, have a lesser monthly payment, and get the benefit of building equity for when we move in ten years;
-- Stay in the current nice villa and invest the €110,000 in the stock market or something. Use the money I make in the stock market to mitigate some of the damage of renting for ten years;
What would you do? How should I be thinking about this problem? I have to decide this week? Any and all advice most welcome.