Property & loan details
Property running costs
Tax & portfolio
Net wealth over 30 years
Leverage puts property ahead through the middle years; ETF compounding on reinvested cashflow overtakes it near year 20.
Key milestones
| Year Y | ETF net | Property net Prop. net | ETF − Property ETF − Prop |
|---|---|---|---|
| 1 | $209,709 | $169,643 | +$40,066 |
| 5 | $299,908 | $297,593 | +$2,316 |
| 10 | $453,136 | $479,259 | −$26,123 |
| 15 | $674,072 | $705,463 | −$31,392 |
| 20 | $1,013,692 | $1,006,286 | +$7,406 |
| 25 | $1,540,954 | $1,406,836 | +$134,118 |
| 30 | $2,359,533 | $1,941,972 | +$417,561 |
Advantages of ETFs
- They're diversified. Your money is spread across hundreds or thousands of companies, so one bad apple can't sink you.
- You can sell them gradually. Realise a slice at a time and each gain is taxed at your ordinary marginal rate — typically 30–37% — while the rest of the portfolio keeps compounding.
- Liquidity is high. You can sell ETFs in minutes, while selling a property can take months and efforts.
- You can invest small amounts. ETFs are accessible to most investors, while property requires a large deposit and ongoing cashflow to service the loan.
Risks with property
- It's one concentrated asset. A bad tenant or a natural disaster can potentially destroy your returns.
- You sell it all at once. A large share of a decades-long capital gain lands above the top tax bracket — taxed at 47%.
- Time and effort. Property requires ongoing maintenance, tenant management, and the risk of vacancy. It generally takes more of your time and attention than a simple ETF investment.
- Negative cashflow. If your rental income doesn't cover the mortgage and expenses, you must fund the shortfall from your own pocket, which can be stressful and extra risky.
Cost base + capital gain = the asset's market value, not your equity: $841,062 + $1,967,927 = $2,808,989. Property net ($1,941,972) further deducts the loan still owing ($600,000) and the selling commission ($50,562) — plus CGT when the toggle is on. The ETF side has no loan or exit costs, so cost base + gain ($641,100 + $2,222,526) equals its value of $2,863,627.
General information only, not financial advice. Assumes rent and running costs indexed to inflation, ETF distributions reinvested, and equal ongoing cash committed to both strategies. Green = ETFs ahead, blue = property ahead.
Frequently Asked Questions
How this comparison works
Mirrored cash flows. The property scenario pays the deposit, stamp duty and purchase costs upfront and covers any yearly shortfall (interest + costs − rent, less the negative-gearing refund). The ETF scenario invests those exact same amounts instead — same upfront cash, same yearly contributions. If the property becomes cash-flow positive, the surplus is invested into the same ETF, so both paths always deploy identical investor cash.
Property net wealth at each year = market value − selling commission − remaining loan (+ any reinvested surplus). ETF net wealth = portfolio value. With "Apply CGT at sale" on, both sides deduct capital gains tax: the gain gets the 50% discount, is stacked on top of an income at the floor of your selected tax bracket, and is taxed through the full progressive schedule (including the Medicare levy) — so a large gain climbs into the top brackets no matter which marginal rate you picked. The property's cost base includes stamp duty, purchase and selling costs. The alternative indexed cost base method inflates the cost base by inflation for each year held (each ETF contribution indexed from its own year) and taxes the full real gain with no discount — a what-if echoing Australia's pre-1999 indexation rules, which in reality are CPI-based, frozen at September 1999, and available only for assets bought before then.
Assumptions. Rent is anchored to the purchase price and grows with inflation; council rates and insurance also grow with inflation; maintenance and strata are percentages of the property's current value. P&I loans amortize monthly over 30 years; principal repayments are not tax-deductible. Positive rental income is taxed at your marginal rate every year; losses are refunded only when negative gearing is on. ETF returns are the historical annualised figures, already net of management fees; contributions compound once a year, and each year's distribution is taxed at your marginal rate with the net amount reinvested (which also raises the CGT cost base).
Not modelled: LMI (deposits under 20%), land tax, depreciation deductions, rate changes over time, ETF buy/sell spreads and brokerage, franking credits, and your own risk tolerance. This is a projection, not financial advice.
Can I share my ETFs vs property comparison?
Yes. Every input is encoded in the page address as you type — copy the URL and anyone who opens it sees exactly the same comparison.
Is LMI (Lenders Mortgage Insurance) included?
No. LMI is not modelled in this comparison. If you are investing with a deposit under 20%, you would typically need LMI which usually varies 1%-6% depending on your Loan-to-Value Ratio (LVR).
Why does the ETF scenario receive yearly contributions?
Because the property investor pays them too. A negatively geared property costs money every year (interest and expenses exceed rent), and an honest comparison invests those same dollars in the ETF scenario. Comparing a leveraged property against a single lump sum would flatter the property.
Is negative gearing really a benefit?
It softens the loss — it never turns a loss into a profit by itself. A $10,000 rental loss at a 32% marginal rate still costs you $6,800 after the refund. The calculator applies the refund automatically when the checkbox is on.
Why enabling Negative Gearing decreases ETF Net returns?
The negative-gearing refund doesn't create property wealth. Property net wealth = market value − selling costs − loan balance. A tax refund changes none of those three numbers — the house isn't worth more because the ATO sent you a cheque. What the refund actually does is reduce your yearly out-of-pocket cost of holding the property.
The ETF scenario invests exactly what the property costs you. That's the tool's core promise: both strategies deploy identical investor cash. With gearing on, the property's shortfall shrinks (say from $14,173 to $9,638 in year 1), so the ETF investor — who mirrors your actual cash outlays — also invests $4,535 less that year. Less contributed, less compounded: ETF net wealth falls.
So the benefit of negative gearing shows up as relative improvement, which is the economically honest place for it: the property scenario achieves the same final wealth while you tip in less total cash (you can see this in the 'Total invested' column shrinking when you toggle it). Since the ETF alternative only gets that smaller cash stream, the gap moves in property's favour — just via the ETF line dropping rather than the property line rising.
Which wins — property or ETFs?
It depends almost entirely on the assumptions, which is the point of this tool. Property benefits from leverage on a large asset; ETFs benefit from lower costs, no stamp duty and no selling commission. Adjust capital growth, rent yield and expected ETF return to see how sensitive the answer is.