Should You Buy Investment Properties, or Just Keep Buying a Better Home?

Should your next $1 million of borrowing go towards an investment property, or upgrading the family home and investing the difference into super?

Working with our financial planning partners, we modelled two Australians starting at 30 with the same $1 million home.

• Person A keeps the home and buys two $1m investment properties, at 35 and 40
• Person B upgrades the family home twice and invests the cash flow saved into super

At first, the property investor looks like the clear winner. But once you factor in debt, holding costs, selling costs and tax, while compounding the super contributions, the gap becomes very small.

Perhaps the bigger question is not "what is the best mortgage rate?"

It is "what do I want my personal balance sheet to look like at 65?"

The pieces are not separate decisions

Your home, mortgage, investments and super are not separate decisions. They are all part of the same long-term wealth strategy.

As retirement approaches, the way your home and investment loans are structured can become just as important as how quickly you pay them down. The right strategy is not always about owning more property. It is about creating the right balance of assets, debt and cash flow for the life you want.

Modelling is illustrative and based on assumptions that will not match everyone. Whether either approach suits you depends on your circumstances, and that is a conversation for a licensed financial adviser alongside us.