Aussie FIRE Maths

In this lineup let's see the difference in FHSSS and HISA. FHSSS $10K put into FHSS ends up as $8,500. Lets assume 4% deeming rate, so you can withdraw =$8,500 x 104% = $8,840. Now you withdraw with - MTR 32%: = 8,840 x (100% - 32% + 30%) = $8,663.2 - MTR 39%: = 8,840 x (100% - 39% + 30%) = $8,044.4 - MTR 47%: = 8,840 x (100% - 47% + 30%) = $7,337.2 HISA $10K income into HISA. Lets assume 5.5% return. - MTR 32%: = 10,000 x (100 - 32%) x (100% + 5.5% x (100% - 32%)) = $7,054 - MTR 39%: = 10,000 x (100 - 39%) x (100% + 5.5% x (100% - 39%)) = $6,304 - MTR 47%: = 10,000 x (100 - 47%) x (100% + 5.5% x (100% - 47%)) = $5,454 FHSS Relative Improvement Relative to HISA So how much better if FHSS? - MTR 32%: = (8,663.2 - 7054) / 7054 = 22.8% - MTR 39%: = (8,044.4 - 6304) / 6304 = 27.6% - MTR 47%: = (7,337.2 - 5454) / 5454 = 34.5% DIV293 If your div293 income excluding super is over $250k then the extra money you put into super will get DIV293. This might not reduce how much you can pull out...

If you don't have an PPOR Offset, you might be tempted to use your IP Offset.  But as an IP offset is against an IP and not a PPOR, the interest saved is indirectly taxed. So the benefit is minimal. In addition to this, the IP offset often locks the 'saved' interest into the mortgage where it is unable to be extracted for a future PPOR purchase. And as the full 6% saved is locked in, the additional tax comes from your savings, and so this approach certainly speeds up paying off the IP at the expense of your savings and future PPOR. Lets assume you want to put $10k into either option. 5.5% HISA, 6.3% IP Mortgage. HISA - MTR 32% = $10,000 x (5.5% x (100% - 32%)) = $374 - MTR 39% = $10,000 x (5.5% x (100% - 39%)) = $335.5 - MTR 47% = $10,000 x (5.5% x (100% - 47%)) = $291.5 IP Offset - MTR 32% = $10,000 x (6.3% x (100% - 32%)) = $428.4 - MTR 39% = $10,000 x (6.3% x (100% - 39%)) = $384.3 - MTR 47% = $10,000 x (6.3% x (100% - 47%)) = $333.9 Cashflow Now the catch is the IP offs...