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Offset vs ETFs in Australia: what does $100k really grow to over 10 years? Real numbers, real tax rules, and the new 2027 capital gains tax changes.
You have $100,000. Put it in your home loan offset, or buy ETFs? We run both side by side, after tax.
Chapters:
0:00 $100k offset vs ETFs
0:25 How an offset account works
1:21 Offset account after tax return
2:29 What is an ETF like VAS
3:44 How ETF payouts are taxed
4:12 CGT changes from 1 July 2027
4:51 Offset vs ETF 10 year result
6:29 ETF risk vs offset account
7:35 Split money between offset and ETFs
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Legal Disclaimer:
General information only. This is not financial, tax or legal advice. It does not consider your personal situation. Rules, rates and limits can change. Check with the ATO or your lender, and think about speaking with a licensed financial adviser. Past returns do not predict future returns.
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#australianhousingmarket #homeloanaustralia #australianfinance
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I’ve already made the choice. Most of my excess savings is in an offset, with some emergency savings held in an external bank. For me, it’s knowing that I’m going to save money without having to be concerned about any extra tax burden. Without a home loan, I wouldn’t hesitate to invest in ETFs, I’ve actually set up ETFs for my daughters.
Should’ve done all tax brackets
Good comparison, does the eft comparison take into account the extra interest you'd be paying on the home loan if you took 100k offset funds and moved them out to EFTs? Yes you'd be earning more from EFTs but you'd also be paying more in interest on the home loan?
Since you reinvested the 100k in the etf, then a true comparison would be adding the interest you saved on the mortgage to the “base” in the offset progressively.
In that comparison the offset likely outstrips the etf
Timing is everything. And no one can predict asset price movements over the next 10 years.
Both (depending on how big the mortgage is). Diversification is important.
And if you're on the 45% tax bracket, it's even worse. It would have been good to see those numbers in the video too.
For me, I prefer to keep most of my funds in an offset because I don't want the double whammy of a recession tanking my shares when I might also have lost my job and need cash to stay afloat.
I am struggling with this very decision, especially as interest rates rise. ETF return needs to almost be 10% to make it worth while… but I don’t want to pay CGT on gains either 😅
What happens in 20 years? With a ten year etf investment the effect of compounding interest is muted
Great video. Stress tolerance is also a factor in the real world.
Debt recycle and do both at same time
How about Offset vs Super? Then paying off the house when you reach preservation age.
We've got $200k in the offset with a loan balance of $550k. Only $10k in ETF's outside super.
If you are in the 45% tax bracket it is even worse for share returns.
I had a look at a popular Australian share etf 1 year return negative 10%
I think a lot I ETFs will be loosers they lead to over cooked share prices
Fundamental omission in your data, which you did touch on. Homeloan rates are non static. You assumed the 6.25% homeloan rate was over the past 10yr and 7yr when you did the analysis. This skewed in the number in favour of offset given the high rates were currently have but is not reflective of historical rate fluctuations or averages.
Another factor in this is whether you need the capital gains as physical cash – i.e. when hou sell the etfs. Putting in the offset only saves you the money but you never really have access to the interest saved. For example, if you want retire early and require the equity and capital gains.
Just my 2c worth (currently sat in my offset)
Franking credit won't last long under this government.
I believe Maroochydore was the big winner here
If this had debt recycling, highest tax bracket and a mounts over 10, 20 and 30 years it would be great for me.
Thanks for your channel. It's very helpful
The market rewards patience, discipline, and knowledge—not emotions. 📈💰 Smart investors focus on long-term growth, manage risk, and let compounding do the heavy lifting. The real question is: are you investing for the future or chasing quick profits? 🚀
How can I start investing?
For me it's the offset every time, especially on the top rate. A guaranteed, tax-free return with no stress is a winner. Combine this with salary sacrifice into super to get the tax break and you have my strategy in a nutshell. The Labor government is anti-investment with its new CGT rules. There are only two remaining options: PPR and Super. And this is what they will come for in 2028 when they win a 3rd term.
The correct comparison is ETFs vs Savings accounts where most people tend to park their money for the best interest rate available in the market and even go great lengths to jump all the hops to get bonus interest rate.
After you build a decent safety buffer of funds in the offset, I believe 50/50 is the best way forward.
What this video does not really cover is that the offset also causes a compounding effect because more debt is paid down and more princesable is paid down each year on top of saving the 6.5% interest.
If you want video editor like this Dm per video 15 $
Loving the content Luke I’ve learnt heaps from you mate so Thankyou. I’m 43, one income ($250k) have $400k mortgage on my PPOR and an investment in Rockhampton I have on the market atm. Plan is to sell investment, that will nearly pay off my mortgage, then pump our super up until retirement. I want to retire at 55.
The stock market this year has been a total dog. ETFs have all underperformed
Great video, be good to factor in debt recycling and re-run the numbers for different tax brackets.
Great video! As other commenters have mentioned I’d love to see a comparison on how debt recycling changes this across a variety of scenarios 👍