Compounding rewards two things: time, and how much of your lever you put to work. This tool takes the same money and follows it down three paths over the years you hold it. A savings account, where the interest is taxed every year. Your own home, where the whole property grows and the gain is free of capital gains tax when you sell. Or an investment property, where growth is untaxed while you hold, with capital gains tax due only at sale. Same money in, same growth rate, so you can see what time, tax, and borrowing do to what you actually keep.
Set your numbers
Move the sliders. Every path uses the same money in and the same growth rate, so the comparison stays fair.
To demonstrate the power of compounding, this tool leaves out any associated home loan repayments, or any rent where there is no home ownership. Our aim is to equate the cash invested, be it into a bank or property, or any other asset class such as ETFs, and then highlight the impact of gearing. Stripping home payments from the exercise reduces the complexity given the many variables. To model your own position accurately, contact Charter Finance. This calculation is purely in place to highlight the impact of compounding and DOES NOT consider multiple critical factors including borrowing capacity, mortgage insurance, stamp duty etc
$1,500,000The home or investment property you would buy.
$375,000
5% p.a.Applied equally to savings and property.
$0 / monthOn the savings path this compounds to your balance. With property, it adds to your equity, but ordinarily would be used to repay debt instead.
The savings path is taxed at this rate every year.
Age 30When you put the money in.
Age 60How long you hold before you sell or stop.
Set your selling age at least one year later than your buying age to see the projection.
What you keep, three ways
All figures are shown at the age you sell or stop.
Savings
Money in the bank
Your money in, growing at the rate you set, with interest taxed every year.
$0
Your balance after tax
Your money in$0
Growth kept after tax$0
Growth lost to tax$0
Return on your money in0%
Annual rate of return (IRR)0% p.a.
Interest is taxed each year at your marginal rate, so the balance grows more slowly than the headline rate suggests. Taxed every year
Your home
Owner-occupied home
Your money in unlocks the whole property. The full value grows. No tax on the gain when you sell.
$0
Your equity, free of capital gains tax
Your money in$0
Property value at sale$0
Loan remaining at sale$0
Extra you added$0
Return on your money in0%
Annual rate of return (IRR)0% p.a.
Your own home is free of capital gains tax on sale. The loan against the property is not modelled with repayments. Any extra you add goes straight to your equity. Living costs are not modelled. No tax on the gain
Investment
Investment property
Same borrowing, same growth. No tax as you hold. Capital gains tax at sale, worked out the indexation way.
$0
Your equity after capital gains tax
Your money in$0
Property value at sale$0
Loan remaining at sale$0
Extra you added$0
Capital gains tax at sale$0
Return on your money in0%
Annual rate of return (IRR)0% p.a.
Capital gains tax here uses the indexation method: 3% inflation lifts the purchase cost before the gain is taxed. Indicative only. Indexation method
Your money over the years you hold
Three paths, same money in, same growth rate.
Why the property paths pull ahead
The money you have to invest unlocks the whole property, so the growth runs on the full price, not just your deposit. You put in $375,000, but you control a $1,500,000 asset. That borrowing is the bigger driver of the gap between the paths. Tax is the second driver. This tool shows both. It assumes you would pay to live somewhere either way, so it does not model rent against mortgage repayments.
Time is the quiet ingredient
Someone who buys at 30 and holds to 60 gives compounding 30 years to work. Buy the same property later and the same growth rate has fewer years to build on. Move the buying-age slider to see how much those extra years are worth. The point is not the asset. It is the time, or the years, and the gearing.
Understand your LEVER
Your LEVER is the spare cashflow you can put to work each year, whether that is paying down debt or building an asset. This tool shows what disciplined saving can become. What it cannot and does not do is tell you what is right for your situation, your income or your borrowing capacity.
No loan repayments are modelled, so a loan balance remains at the end. This is deliberate. The tool compares what the same cash does in three places, so it strips out the cost of living in each one. Whether you rent or pay a home loan, that cost sits outside this tool. The loan on the property paths is held flat and interest-only, which is why you will still see a balance owing after thirty years. In real life a principal and interest loan would be paid down over the term and that balance would be zero. This cuts both ways. The property paths do not carry the interest cost of the loan, which flatters them, and they are not credited with the interest saved by paying the loan down, which does the opposite. The savings path carries its tax every year, as it would in real life. The figures here isolate the effect of gearing and tax treatment on the same starting cash. They are not a comparison of what each path costs you to hold.
Any extra money you add each month reduces the loan dollar for dollar until it reaches zero, and anything beyond that is held as cash against the property. Because that extra is counted as money you put in, adding more will lower the return on your money in even as it raises your final equity. That is arithmetic, not a verdict on paying down debt. The annual rate of return is the steadier figure to watch when you move that slider.
Your money in is an estimate covering the deposit plus stamp duty and purchase costs. The real figure varies by state and by property, and by whether you qualify for any concession. The default of $70,000 on a $700,000 property is an estimate, not a quote.
This tool does not assess your ability to borrow. It does not look at your income, your existing debts, or lender serviceability rules, nor provide any advice, tax or otherwise. Being able to borrow / buy at this level is a separate conversation to be had with Charter Finance. The tool does not warrant that you will be able to borrow to any level shown.
The deposit slider starts at 10% of the price. On most purchases your money in needs to cover roughly a 5% deposit plus around 5% in stamp duty and purchase costs, so 10% is a realistic floor. A deposit below 20% ordinarily attracts lender's mortgage insurance, which is not shown in these figures. On a purchase around $750,000 with a small deposit, that cost can run to roughly $28,000 to $38,000. Eligible first home buyers may pay none of it under the Australian Government First Home Guarantee, which lets a first home buyer purchase with as little as a 5% deposit and no lender's mortgage insurance. That scheme requires you to be a first home buyer, an owner-occupier, an Australian citizen or permanent resident, and buying under the property price cap for your area, and it is a government guarantee to the lender, not a cash grant, so you still borrow up to 95% and remain responsible for the loan. Some professionals also qualify for a separate lender's mortgage insurance waiver. Whether any of these apply to you is a separate question for Charter Finance.
Your own home is free of capital gains tax on sale. An investment property is not. The investment path applies capital gains tax at sale using the indexation method. Inflation is estimated at 3% per year, which is indicative only.
Growth and inflation are assumptions you set or that are fixed here, not predictions. Real returns will vary, and past growth does not guarantee future growth.
The savings path is taxed each year at the marginal rate you choose. Tax rates detailed are current against the ATO for the 2026-2027 financial year.