Where to invest $1 million in Australia: where secured lending fits

There is no single right place to invest $1 million in Australia. Many investors split it into sleeves: cash and term deposits for flexibility, shares for long-term growth, and a secured income sleeve that pays more than a bank. At $1 million, a sleeve co-funding short term loans secured by property becomes a realistic option, and because each loan can take from $100,000, it can be spread across several loans.

This is general information, not advice about your circumstances. What follows is how some investors think about a seven-figure sum, written by HomeSec Business Finance, an Australian private lender founded in 2004 that invites wholesale investors to co-fund some of its loans.

What changes when you have $1 million to invest?

Three things change once a balance reaches seven figures.

Bank backing runs out. The Financial Claims Scheme covers deposits up to $250,000 per account holder per ADI. To keep $1 million fully covered in cash, you would need to spread it across at least four banks.

Wholesale investments may open up. You can generally be treated as a wholesale investor with an accountant’s certificate, no more than two years old, showing net assets of at least $2.5 million, or gross income of at least $250,000 in each of the last two financial years. Net assets include property, not just cash. Our page for wholesale investors explains the tests.

The cost of a low rate grows. On $1 million, the gap between 5% and 12% is $70,000 a year before tax. At that size, where the money sits is a decision worth real time.

How much interest does $1 million earn?

The table below shows what $1 million would earn in a year across common income options. It is an illustration only, before tax, using simple interest and assuming the capital is fully invested for the whole year and repaid on time.

These are not like-for-like. A term deposit is covered by the Financial Claims Scheme up to its limit. A pooled fund and a co-funded loan are not. And with co-funded loans, you only earn while your capital is lent; between loans, it sits in your own account.

How do some investors split $1 million?

Most investors with $1 million do not put it all in one place. They think in sleeves, each with a job. The three mixes below are illustrations of how some people approach it, not recommendations.

Each mix answers a different question. The growth mix leans on the long run: Vanguard’s figures for the 30 years to 30 June 2026 show Australian shares returning 9.0% p.a., but with years of sharp falls along the way. The income mix trades some of that growth for a predictable contracted rate. The parked mix suits someone between a sale and a purchase, which we cover in short term investments for large balances.

What about buying an investment property instead?

For many Australians, $1 million instinctively goes into bricks and mortar. Property has a strong long-run record and gives you something tangible. But it is a very different way to hold money than an income sleeve.

A direct property ties the capital up in one asset, with stamp duty and selling costs at either end, and the net rental yield is usually modest once rates, insurance, maintenance and vacancies are counted. The market also moves. Cotality’s August 2026 index shows national values down 3.1% over the quarter and 3.6% below their March 2026 peak, even as rents rose 5.7% over the year.

Lending against property is another way to use the same asset class. Instead of owning the house and waiting for growth, you hold a registered mortgage over it and earn a contracted rate, with the owner’s equity sitting between your loan and the property’s value. You give up the growth, and in exchange you get income and a buffer. Some investors hold both. You can read more in our overview of the Australian property market.

What would a $500,000 co-funding sleeve look like?

Take the income-first mix. Half the money, $500,000, goes into co-funded loans alongside HomeSec. Because each loan can take from $100,000, the sleeve does not have to sit in one loan: it might be two loans of $250,000, or several smaller ones across different properties and states.

What you own. A share of each specific loan you choose, not units in a fund. You are named on the registered mortgage for your exact contribution, alongside HomeSec, which co-invests its own money in every loan it offers.

What you see first. Before deciding, you receive a due diligence pack covering the property, the valuation, the LVR, the borrower, the exit and the rate. The maximum LVR is 80% on residential property and lower on commercial. You can say no to any loan.

What it earns. As an illustration, $250,000 in one loan at 12% p.a. earns $30,000 over 12 months before tax; at 15%, $37,500; at 18%, $45,000. Across the full $500,000 sleeve, fully lent for the year, that is $60,000 to $90,000. Loans run for 1 to 12 months, so the sleeve may be lent across several loans in a year.

How the money comes back. Principal and interest are paid straight to your own bank account. If you need out before maturity, HomeSec will buy out your share and repay your principal. There is no redemption queue.

What are the trade-offs of a secured lending sleeve?

A higher rate comes with different risks, and it is worth being clear about them.

• Concentration. Each loan is tied to one borrower and one property. Because each loan can take from $100,000, you can spread the sleeve across several loans, properties and states rather than holding it in one.
• No deposit backing. Your protection is the registered mortgage, the equity buffer below the LVR limit, and the ability to enforce and sell if needed. HomeSec meets the legal costs of recovery on defaulted loans.
• Timing. A loan can be repaid late. If you need money on a fixed date, pick loans that mature well before it.
• Income, not growth. A loan pays interest and returns your capital. It does not grow in value the way shares or property can.

These are different risks from those in a pooled fund, where in August 2026 ASIC warned of the first significant cracks in Australian private credit as several funds restricted withdrawals. Our guide to alternatives to term deposits ranks each option by risk.

How is the interest taxed?

Interest is income, taxed at the rate of whoever holds the investment: you personally, a company, a family trust or an SMSF. Lending is an input-taxed financial supply, so interest earned is not subject to GST.

The entity you invest through can matter as much as the rate. An SMSF in accumulation phase pays 15% on earnings, and 0% in retirement phase, with additional tax on larger balances from 1 July 2026. Many families with $1 million or more hold investments across several entities for this reason. Your accountant can show you which suits each sleeve.

Where does HomeSec fit for a $1 million investor?

For many families and business owners, HomeSec sits in the income sleeve. It has lent its own money since 2004, funds most loans off its own balance sheet, and on some loans invites wholesale investors to co-fund alongside it.

It is not a pooled fund. You choose each loan from its pack, you are on the mortgage, and repayments come to you. HomeSec earns mostly when loans are repaid, and its own money sits in the same loan as yours. Our page for family offices and high-net-worth investors explains how larger investors use co-funding, including through companies, trusts and SMSFs.

What should you do next?

Work out when you need the money back, how much income you want, and how much price movement you can live with. Those three answers usually point to the mix. If a secured income sleeve is part of yours and you’d like to see what a loan pack looks like, register your interest and our Funding Manager will be in touch.