From the Desk

Everyone knows the two big places spare money goes: extra into super, or extra off the mortgage. Almost nobody runs the actual numbers on which one serves them better right now.

An offset account is a transaction account attached to your home loan. Every dollar sitting in it reduces the loan balance you’re charged interest on. $50,000 in offset against a 6% loan saves you $3,000 a year in interest, guaranteed, tax free, and you can still spend that money tomorrow if life demands it.

That last part is the point. A return you don’t pay tax on, at your mortgage rate, with zero risk and full access.

Extra super contributions have real advantages: concessional tax on the way in and compounding for decades. But that money is locked away until preservation age. The offset gives you a guaranteed after-tax return at your loan rate AND keeps every dollar available, for emergencies, opportunities, renovations, or the next property.

For most people the answer isn’t one or the other, it’s sequence. Money you can’t afford to lock up belongs in the offset. Money you’re certain you won’t need before retirement can work harder in super. And the higher your loan rate, the stronger the offset’s case, at today’s rates a dollar in offset is beating what most balanced super options return after tax, with none of the risk.

The strategy only works if the loan is set up properly: a true offset (not redraw dressed up as one), your income landing in the offset, expenses running on a credit card paid in full monthly so every dollar spends maximum days offsetting. Small structural choices, thousands of dollars of difference over a loan’s life.

Want your loan structured so your money works this hard? Message BOSS. 0476 111 000, tom@bossmoney.com.au, or DM.