Invest vs Offset Calculator
Should your spare cash go into your home loan offset or into investments? Compare both after tax.
Investing figures assume income is taxed each year and the investments are sold at the end with the 50% CGT discount. The offset saving is tax-free and risk-free.
Printed from ClearCalc (clearcalc.com.au/invest-vs-offset-calculator/). Estimates only, not financial advice.
Why the offset is a high bar to beat
Every dollar in your offset account saves interest at your home loan rate. That saving isn't taxed, has no fees and carries no risk. At a 6.2% rate and a 32% marginal tax rate, an investment paying taxable income needs to earn about 9.1% before tax just to match it, and more again if you count the risk.
Investments do get some help: capital growth isn't taxed until you sell, and then only half the gain is taxed if you've held it for more than 12 months. That's why growth investments can come out ahead over long periods, especially for people on lower tax rates.
When each option makes sense
- Offset first if you want certainty, may need the money soon, or are on a high tax rate.
- Investing may suit you if you have a long time frame, a lower tax rate, and can ride out falls in value.
- Both: many people keep an emergency fund in the offset and invest regular extra savings.
- Debt recycling is a third option for some home owners. See the debt recycling calculator.
This is general information, not financial advice. Returns are not guaranteed. Speak with a licensed financial adviser before you invest.
Frequently asked questions
Is an offset account better than investing?
It depends on your loan rate, tax rate, time frame and how much risk you can take. The offset gives a guaranteed, tax-free return equal to your loan rate. Investing could earn more over the long term, but with ups and downs.
Is offset interest taxed?
No. Money in an offset doesn't earn interest. It reduces the interest you're charged, so there's nothing to tax.
What about an investment property loan?
If your loan is for an investment property, the interest is tax-deductible, so the after-tax benefit of the offset is lower. Pay down non-deductible home loan debt first.
Last reviewed October 2026. This calculator gives an estimate for general information only. Check important figures with the relevant government agency or a licensed professional.