At some point, mortgage holders might face a challenging question – should they put as much money as possible in their offset account, or share the love and invest some of it in the stock market?

First, the bad news (it’s usually better this way): there is no crystal ball with the perfect answer. The good news is that both options have the potential to increase savings, and it’s great to have the option to choose what to do.

Keeping your cash in your home loan, or putting it into an investment option can be a difficult decision.Credit: Simon Letch

The key difference is that the returns from an offset account are guaranteed, whereas investing involves some risk.

Let’s break it down.

An offset account is a transactional account linked to your home loan. You can put money into it and withdraw whenever you want. “The money you hold in the offset account reduces the interest charged on your home loan,” says Quyen Truong, co-director at financial advisory Bruining Partners.

“For example, if you have $50,000 in an offset account and a loan of $200,000, you’d only be charged interest on $150,000.” Having money in an offset account is a productive way of storing a decent amount........

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