Aussie FIRE | Financial Independence Retire Early 48. Offsets vs Investing: What’s Really Best for Your Mortgage?
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Sep 26, 2025 Delve into the debate of whether to funnel cash into offset accounts, savings, or investments. The hosts dissect how offsets can lower long-term interest but do little for monthly cash flow. They explore scenarios where savings accounts might compete and reveal the numeric benefits of offsets. Insights on interest rates, debt recycling, and time horizons offer a fresh perspective. Discover the risks of investing versus offsets and why many shy away from market moves, highlighting the importance of financial security in decision-making.
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Offset Lowers Interest But Not Monthly Cashflow
- An offset reduces total interest over the life of the loan but does not lower the mandatory monthly repayment.
- A savings account produces monthly cash flow from interest while offset only reduces long-term interest expense.
Choose Savings For Immediate Cashflow
- If you need short-term cashflow, prefer savings that pay interest into your bank account rather than an offset.
- Use offset for long-term interest reduction, but keep savings if monthly cash matters.
Mother's Tight Budget Example
- Hayden describes his mother buying a small apartment with very little spare cash and the trade-off between offset and savings for cash flow.
- He suggests bringing forward cashflow by using savings if a slower mortgage payoff is acceptable.