Super vs ETFs vs property, the real comparison

The Australian wealth-building debate is mostly tribal. The property bros yell at the ETF bros yell at the super bros. Each tribe has a half-truth and a vested interest.

I hold all three. I've held property for fifteen years, ETFs for ten, and I've been topping up super since my late twenties. Here's the actually-useful comparison, with the trade-offs spelled out.

The frame: it's not which is "best"

There is no single best asset class. There are different tools for different jobs. The right portfolio is a blend, weighted by your timeline, tax situation, risk tolerance, and how much complexity you can stomach.

I'll cover each on:

• Expected return
• Tax treatment
• Liquidity
• Effort required
• Concentration risk
• The thing nobody mentions

Super

Super is the most boring and the most powerful tool in the AU stack. The boring part is why most blokes ignore it for too long.

Returns: a typical Balanced fund returns ~6-7% nominal long-run. High Growth ~7-9%. Index options inside industry funds get you market beta at very low cost.

Tax: 15% on contributions and earnings inside accumulation. 0% in pension phase after age 60 (within transfer balance cap, currently around $1.9m). This is the killer feature. A dollar inside super compounds at a much friendlier tax rate than a dollar outside.

Liquidity: zero until preservation age (60 for most readers). This is super's biggest weakness and its biggest strength. You can't touch it. You also can't blow it.

Effort: very low. Set the option, set the contribution, check it once a year.

Concentration: low. Diversified across asset classes by default.

The thing nobody mentions: insurance inside super is often overpriced and under-customised. Check it. Adjust it. Don't just accept the default.

How I use it: max the concessional cap (around $30k/year FY 2025-26 including employer) where cash flow allows. Use carry-forward unused caps if you've had a low-contribution year. Index option, low fees, set and forget.

ETFs (outside super)

ETFs are the Swiss Army knife of personal investing. Cheap, liquid, transparent, diversified. Boring in the best way.

Returns: depend on the mix. A globally diversified equity ETF portfolio (VAS + VGS + VGE or similar) targets ~7-9% nominal long-run, with significant volatility year-to-year.

Tax: dividends taxed at marginal rate (with franking credits on AU shares). Capital gains taxed at marginal rate, halved if held more than 12 months. No special structure required.

Liquidity: you can sell on any market day. Cash hits your account in a few days.

Effort: very low if you DCA. Slightly more if you rebalance quarterly.

Concentration: depends on the ETFs. A single-country ETF is concentrated. A 3-fund global portfolio is diversified.

The thing nobody mentions: behaviour is the only thing that matters. The S&P 500 returns ~10% long-run. The average S&P 500 investor returns more like 6%, because they sell at the bottom and buy at the top. Picking the ETF is the easy bit. Sitting through a 30% drawdown without selling is the hard bit.

How I use it: monthly auto-buy across three ETFs, regardless of price. Rebalance once or twice a year. No timing, no tinkering.

Property

Property is the asset class Australians are most emotional about and most leveraged on. Both of those facts matter.

Returns: capital growth varies wildly by city, suburb, and decade. Sydney and Melbourne have done ~6-8% long-run. Many regional and second-tier markets less. Plus rental yield (gross 3-5%, net much lower after costs).

Tax: negative gearing means net rental losses can offset other income. Capital gains taxed at marginal rate, halved if held over 12 months. Depreciation can shelter income on newer builds. Trust structures can help with income splitting.

Liquidity: terrible. Selling takes months, costs 4-6% of the sale price all-in (agent, marketing, legals, possible vendor concessions), and the market doesn't always cooperate with your timeline.

Effort: moderate to high. Tenants, repairs, agents, rates, insurance, capex events. Even with a property manager, you're the asset owner.

Concentration: high. A single property is one street, one suburb, one tenant. Fire, flood, council zoning change, all idiosyncratic risks.

The thing nobody mentions: the leverage cuts both ways. A 20% deposit on an $800k property gives you 5x exposure to the underlying asset. A 10% rise in price is a 50% return on equity. A 10% fall wipes you out. People who got rich in property between 1995 and 2020 mostly got rich because Australian property went up. Forward returns are not guaranteed.

How I use it: I hold properties I bought at sensible prices in markets with strong long-term fundamentals (school zones, infrastructure, employment). I don't churn. I don't chase yield in regions I've never visited. I treat the leverage with respect.

Side-by-side, post-tax, ten-year forward

This is rough and the assumptions are doing a lot of work. But here's how I sketch it on the back of an envelope:

• Super (concessional contributions, indexed): 6-7% nominal pre-tax inside, ~5-6% after the 15% earnings tax. Effective real return after inflation: 3-4%. Very low effort.
• ETFs (outside super, marginal tax 37%+): 7-9% nominal pre-tax. After-tax depends heavily on franking credits and CGT timing. Real return: 4-5%. Low effort.
• Property (geared at 60% LVR, capital growth focus): mid-to-high single digits net of costs in a good market, much less or negative in a flat one. Real return: highly variable. Moderate to high effort.

Property can outperform if you pick well, time well, and avoid the bad decade. ETFs are the most consistent. Super is the most tax-efficient.

How I split capital

Roughly:

• Super: max concessional, sometimes non-concessional if liquidity allows. Index option, low fees.
• ETFs: monthly DCA into a 3-fund mix (VAS / VGS / VGE), held in a structure that works for my situation (some personal name, some via trust)
• Property: legacy holdings, no plans to add aggressively from here. Letting them do their thing.

The split isn't static. It moves as life moves. The principles do not move:

• Long time horizon
• Diversified across asset classes
• Tax-aware structure
• Behaviourally robust (boring is a feature)

The actual answer

Don't pick one. Hold all three, weighted to your situation. Tax-shelter what you can inside super. Build wealth outside super in low-cost ETFs. Hold property if you've got the temperament for the lumpiness and the leverage.

Boring beats brilliant.

Not financial advice, talk to an adviser before acting.