Oct 5, 2026 · 30 min
A $20,000 bonus tests cash, debt, super and investing
What should I do with a lump sum: Save, super or invest?
A lump sum can improve financial security or create costly mistakes, depending on access needs, tax, debt, risk tolerance and time horizon.
- 1Build accessible emergency savings before directing a lump sum toward longer-term goals.
- 2Repaying expensive non-deductible debt can beat investing when the guaranteed interest saving exceeds expected after-tax returns.
- 3Super offers powerful tax advantages, but restricted access and personal goals determine whether the trade-off fits.
Don't miss
Tom Hayes contrasts the higher expected return of investing a lump sum immediately with the psychological comfort of dollar-cost averaging.
The brief
Tom Hayes uses a $20,000 bonus to build a decision framework: first identify the money’s source, then account for tax, access needs, goals and time horizon.
The first priorities are a three-to-six-month emergency reserve and expensive non-deductible debt; a mortgage offset may also offer a strong after-tax benefit.
Super can compound more efficiently because of its tax treatment, but the advantage comes with restricted access until retirement and contribution rules to navigate.
For money needed within roughly three to five years, safer assets usually matter more than chasing share-market returns; longer horizons can support investing outside super.
The standout tension is mathematical versus psychological: investing immediately has the better expected outcome, while dollar-cost averaging may help investors stay committed.