First Home Deposit vs Invest Calculator NZ 2026/27
Money being saved for a house deposit is not ordinary investment money, and the reason is a single feature: it has a date attached. Ordinary long-term investing survives a market fall because you can simply not sell, wait, and let the recovery happen. A deposit cannot do that. It is needed on a particular day, and a fall shortly before that day hits the entire balance with no time left to recover from it. That one difference inverts most of the usual advice about horizons, because a longer saving period does not reduce this risk, it increases the amount exposed to it. This page runs both paths honestly. It taxes cash at your marginal rate, since bank interest is subject to resident withholding tax, and taxes the invested path at prescribed investor rates, because comparing a gross fund return against an after-tax cash rate is the most common way this decision gets made badly. It tracks both against your actual deposit target, so you can see whether either path gets you there, which frequently turns out to be the more useful finding. And it tests the scenario that actually matters, which is a fall landing just before settlement, then shows the upside and the downside side by side rather than only the expected outcome. Where neither path reaches the target in time, the honest conclusion is usually that the return is not the lever worth pulling, and the amount saved each month or the date itself is.
Cash after tax = rate × (1 − marginal rate), because bank interest is taxed at your marginal rate through resident withholding tax.
Invested after tax and fees = gross return − fund fee − PIE tax. A foreign shares PIE is taxed under the fair dividend rate on 5% of value at your PIR, which at 28% is 1.40% of the balance a year.
The fall is applied to the final balance, which is the correct model for money needed on a fixed date: a fall shortly before settlement affects everything you hold, and there is no time to recover.
Both paths use identical contributions, so the comparison isolates the return and the tax treatment.
Excluded: the KiwiSaver first home withdrawal, which has its own eligibility and withdrawal rules; the First Home Grant; house price movement while you save, which is a real risk running the other way; and any cost of moving money between accounts.
A term deposit can be modelled by entering its rate as the cash rate, provided the maturity can be matched to the purchase date.
Returns are not guaranteed. The expected figures assume a steady return no fund delivers, and the fall scenario is a stress test rather than a forecast.
Not financial advice. Last verified: .
Where each path lands against your target
| Path | You would have | Deposit needed | Short by | Reading |
|---|---|---|---|---|
| Invested, as expected | $129,428.08 | $150,000.00 | $20,571.92 | Still short of the deposit |
| Kept in cash | $119,337.32 | $150,000.00 | $30,662.68 | Still short of the deposit |
| Invested, after a 20% fall | $103,542.47 | $150,000.00 | $46,457.53 | Still short of the deposit |
| You will have contributed | $112,000.00 | Of which savings, not returns |
Where every row falls short, the return is not the lever that matters. The monthly amount or the date is.
Both paths across different horizons
| Buying in | Cash | Invested | After a 20% fall | If it falls |
|---|---|---|---|---|
| 2 years | $78,739.51 | $82,351.62 | $65,881.29 | Behind cash |
| 3 years | $98,800.65 | $105,267.61 | $84,214.08 | Behind cash |
| 4 years | $119,337.32 | $129,428.08 | $103,542.47 | Behind cash |
| 5 years | $140,360.78 | $154,900.63 | $123,920.51 | Behind cash |
| 7 years | $183,914.52 | $210,070.84 | $168,056.68 | Behind cash |
| 10 years | $253,193.59 | $304,578.32 | $243,662.66 | Behind cash |
The expected column improves with time. The fall column never catches cash, because a longer horizon means a bigger balance for the fall to apply to.
What size fall wipes out the advantage
| If markets fall | You would have | vs cash | vs your target | Reading |
|---|---|---|---|---|
| No fall | $129,428.08 | $10,090.76 | -$20,571.92 | Ahead of cash |
| 5.00% | $122,956.68 | $3,619.36 | -$27,043.32 | Ahead of cash |
| 7.80% | $119,337.32 | $0.00 | -$30,662.68 | Level with cash |
| 10.00% | $116,485.28 | -$2,852.05 | -$33,514.72 | Behind cash |
| 20.00% | $103,542.47 | -$15,794.85 | -$46,457.53 | Behind cash |
| 30.00% | $90,599.66 | -$28,737.66 | -$59,400.34 | Behind cash |
The break-even fall is the number to hold onto. Anything larger and you would have been better off in cash.
A Date Changes Everything
The standard argument for investing over cash is that time smooths out falls. It is a good argument, and it depends entirely on being able to wait.
A deposit cannot wait. It is needed when the purchase happens, and if the market falls the month before, the balance is what it is. There is no recovery period because there is no time left.
That is why this decision does not follow the usual rules, and why a longer saving period makes the exposure larger rather than smaller.
Worked Example: $150,000 Deposit In Four Years
Starting with $40,000.00 and saving $1,500.00 a month, contributing $112,000.00 in total.
In cash at 3.50% taxed at 33%, netting 2.35%: $119,337.32.
Invested at 7.00% less a 0.30% fee and PIE tax, netting 5.30%: $129,428.08.
Invested, after a 20% fall just before settlement: $103,542.47.
So the upside is $10,090.76 and the downside is $15,794.85. The downside is larger.
The Number Worth Remembering
On the worked example a fall of 7.80% at the wrong moment wipes out the entire expected advantage of investing.
Falls of that size are not unusual events. They happen in ordinary years without anything remarkable going on, which means the advantage is genuinely fragile rather than theoretically at risk.
Anything larger than that and the cash path would have been better, and you would be looking at a smaller deposit at exactly the moment you need it.
Neither Path Might Get You There
The most useful line on this page is often the shortfall column. On the worked example the deposit target is missed by $30,662.68 in cash and $20,571.92 invested.
When both paths fall short, the return is not the lever. Closing a $30,000 gap through investment returns over four years means taking a great deal of risk for an outcome that still may not arrive.
The levers that actually work are the monthly amount, the date, and the target itself. Our house deposit savings calculator works the required monthly saving backwards from a date, which is the more productive question.
When Investing A Deposit Does Make Sense
Two situations genuinely change the answer.
A soft date. If buying in four years means "four years, or six if the market is down", the money behaves more like ordinary investment money and a fall becomes survivable. The date being genuinely flexible is the thing that matters, not the length of it.
A deposit already secured. If you have the deposit and are saving beyond it, the surplus is not deposit money and does not carry this constraint.
Where the date is firm and the deposit is not yet there, the case for cash is strong regardless of what the expected return says. Our savings to investment switch calculator covers the general version of this trade-off, where the horizon is flexible.
Tax Both Sides The Same Way
A frequent error is comparing a gross fund return against an after-tax savings rate, which flatters investing considerably.
On the worked example the fund returns 7.00% gross and nets 5.30% after fees and PIE tax. The savings account pays 3.50% gross and nets 2.35% after tax at 33%.
The real gap is 2.95 percentage points, not the 3.50 the headline numbers suggest. Our PIE savings vs bank savings calculator handles the tax comparison in detail.
What This Page Leaves Out
KiwiSaver. The first home withdrawal has its own rules, and whether to move a KiwiSaver fund to a conservative option before buying is the same logic applied to a different account.
House prices moving. A rising market raises the deposit you need while you save, which is a real risk that works against saving slowly. It is not a reason to take market risk with the deposit, since your investments falling and house prices rising can easily happen at once.
The First Home Grant and other assistance, which change the target rather than the saving strategy.
Related NZ First Home Calculators
- House Deposit Savings Calculator: the monthly saving a date requires.
- Savings To Investment Switch Calculator: the same trade-off with a flexible horizon.
- PIE Savings vs Bank Savings Calculator: taxing both sides properly.
- Emergency Fund Placement Calculator: where short-term money belongs.
- Cash Drag Calculator: what holding cash costs when there is no date.
- First Home Buyer Guide: background on this topic.
Related calculators
- Property Upsize or Downsize Calculator NZ: True Cost of Moving House.
- Sell Now vs Rent It Out Calculator NZ 2026/27: free NZ calculator comparing selling your home now and investing the p.
- 28/36 Rule Calculator: Mortgage Affordability Ratios.
- First Home Grant Status Checker NZ 2026: closed | What Replaced It.
How to decide whether to invest a house deposit
- Be honest about the date. The whole question turns on when you will actually buy. Money you might need in two years behaves completely differently from money you will not touch for eight, and optimism here is what causes the damage.
- Enter what you have and what you add. The starting balance and the monthly saving. Over a short horizon the contributions do most of the work and the return does very little, which is itself part of the answer.
- Tax both sides properly. Cash interest is taxed at your marginal rate. A PIE fund is taxed at your prescribed investor rate, capped at 28 percent. Comparing a gross investment return against an after-tax cash return overstates the case for investing.
- Test a fall at the worst moment. For money with a date attached, the scenario that matters is a fall shortly before you need it. There is no time left to recover, which is what makes this different from ordinary long-term investing.
- Compare the upside against the downside. The calculator shows both: how much more you would expect to have, and how much less you would have if the market fell. Weigh them against each other rather than looking only at the expected figure.
- Check whether it changes the outcome. If neither path reaches the deposit in time, the useful lever is the amount saved or the date, not the investment return. That is worth knowing before taking any risk at all.