I have two loans against one investment property - one is fixed and one is variable.

I was under the impression that the variable for $50,000 would be offset against my savings of $50,000. In one year the $50,000 variable loan has dropped to $48,000 and my offset savings against it has dropped to $44,000. I thought this $50,000 offset amount (my money) would remain at $50,000. Is this a fake offset account? Or am I just stupid?

I previously had offset funds of $260,000, but instead of paying down the loan the bank advised me to invest most of this money in growth assets (they said paying it down would have meant tax on the rental income and I was worried this income would affect our government entitlements down the track). But the whole idea was to keep my $50,000 savings safe and secure. I think I have a very bad bank manager.

Helen, Sydney

Helen, there's something else going on here - you say the word bank twice and Australian banks have to be authorised deposit-taking institutions, which means they can offer genuine offsets (that keep your cash entirely separate and quarantined from your loan).

You simply have a split investment loan, a small variable part that was originally $50,000 with the equivalent in a (real) offset account and a large fixed part??? with your previous offset funds now invested in growth assets, like the stock market. If you are happy with this level of risk - note that growth assets offer higher potential returns but also the possibility of losing money - this is not a bad structure.

With regards to the variable portion, as a principal and interest loan it will reduce. Realise there is also no point keeping more money in an offset account than you owe on the loan at any given moment; you'll earn/save nothing on it.

But your offset balance would only reduce if you or someone else has arranged:

1. For your variable repayments to come from it.

2. For your variable repayments to come from salary/rent and the to move from your offset to somewhere else.

3. For an automatic transfer for some other reason.

Trawl through your statements for the answer. It's highly possible the difference is because any automatic transfer was set up when your interest rate, and therefore loan repayment, was higher. You'll simply need to amend the amount.

The bigger question, if you're making repayments out of your own pocket, is where is the offset money going? As your emergency stash, you don't want it slowly funnelled into your growth portfolio too.

Nicole Pedersen-McKinnon is a money educator and consumer advocate: themoneymentorway.com. You can write to her for help solving your money problem, or with a consumer question, at nicolehelps@fairfaxmedia.com.au.