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Types of investments

Reviewed and Updated: August 28, 2023

- Mortgage Express: An online resource offering mortgage advice and guidance --- New Zealand offers investors a wide array of choices to grow their wealth. From cash deposits and term deposits for risk-averse investors to shares, property, bonds and other options to tempt entreprenuerial types, the land of sheep, rugby, and investments has something for everyone. You can also engage in diversification, spreading your investments across multiple asset classes and sectors to minimise the impact of a potentially underperforming investment. Before selecting any of these options, consider your financial goals, risk appetite, and investment timeframe, and take the opportunity to consult financial professionals to tailor an investment strategy that best suits your individual circumstances. Resources such as Sorted.org.nz, InvestNow, Sharesies and Mortgage Express are available to help you get started.

New Zealand is a nation of diverse investment opportunities, allowing investors to grow their hard-earned money. From Cash and Term Deposits to KiwiSaver, Shares, Property, Bonds, and other options, the possibilities for capital growth are limitless. With careful research and professional guidance, you can identify and capitalize on the right investment opportunities for you.

New Zealand – the land of sheep, rugby, and endless opportunities to grow your hard-earned money. This peaceful island nation provides investors with numerous options to make their money work for them. This comprehensive guide explores various investment avenues, including Cash Deposits, Term Deposits, KiwiSaver, Shares, Property, Bonds, and other lucrative opportunities.

So grab a cup of tea, sit back, and buckle up for an exciting journey to discover the diverse investment landscape of New Zealand.

Cash Deposits and Term Deposits: An Easy, Low-Risk Option

What are Cash Deposits and Term Deposits?

Cash Deposits refer to the money held in a bank or financial institution that can be easily accessed at any time. Term Deposits, on the other hand, are fixed-term investments where your money is locked in for a specified period at a predetermined interest rate.

Difficulty, Risk, and Potential Returns

Cash and Term Deposits are easy to understand and suitable for risk-averse investors. They offer low-risk, as your money is lodged with a secure financial institution. However, the potential returns are often lower than other investment options, especially during low-interest-rate environments.

Pros and Cons

Pros:

  • Easy to understand and manage
  • Low-risk investment
  • Safety of principal investment

Cons:

  • Low potential returns
  • Limited access to funds (in case of Term Deposits)
  • Low inflation-adjusted returns

Getting Started with Cash and Term Deposits

To get started, approach your preferred bank or financial institution and discuss their Cash Deposit and Term Deposit offerings. Compare different institutions and choose the one that best meets your needs.

What is KiwiSaver?

KiwiSaver is a voluntary, long-term savings scheme designed to help New Zealanders save for their retirement. Members’ contributions are invested in various funds, offering exposure to diverse assets like shares, bonds, and cash deposits.

Difficulty, Risk, and Potential Returns

KiwiSaver is easy to join and requires minimal input from members, as it is primarily managed by professional fund managers. The risk level depends on the selected fund, ranging from conservative to growth-oriented funds. Potential returns vary based on the performance of the underlying assets and the chosen fund.

Pros and Cons

Pros:

  • Employer and government contributions
  • Automatic deductions from the paycheck
  • Diverse investment options

Cons:

  • Limited accessibility to funds (only under specific circumstances)
  • Investment risks associated with the chosen fund

Getting Started with KiwiSaver

To join KiwiSaver, simply choose a provider and sign up through their website or contact them directly. You may also change your existing provider or investment fund at any time.

Shares: Investing in Pieces of Companies

What are Shares?

Shares represent partial ownership in a company, granting shareholders the right to a portion of the company’s earnings and assets. Buying shares enables investors to participate in the growth and success of various companies.

Difficulty, Risk, and Potential Returns

Investing in shares comes with higher difficulty due to market research, company analysis, and constant monitoring of investments. The risks can range from moderate to high, based on the quality and stability of the companies invested in. Potential returns can be significant, especially for long-term investors who identify profitable opportunities early on.

Pros and Cons

Pros:

  • Potential for capital growth
  • Income from dividends payment
  • Liquidity

Cons:

  • Market volatility and uncertainty
  • Potential loss of capital
  • Time-consuming research and monitoring

Getting Started with Shares

To get started, open an account with a share trading platform or brokerage, then research and select companies to invest in. Learn about market trends, company performance, and diversify your investments to minimize risks.

Property: A Favourite Investment Option for New Zealanders

What is Property Investment?

Property investment involves buying real estate to generate income through rental returns or capital gains. New Zealanders have a strong affinity for property investment, as it offers attractive long-term growth prospects.

Difficulty, Risk, and Potential Returns

Investing in property can be challenging, as it requires in-depth research, financial commitment, and ongoing property management. The risk level is moderate, as property prices and rental yields may experience fluctuations. However, the potential returns can be significant, especially in high-demand areas.

Pros and Cons

Pros:

  • Potential for capital growth
  • Income from rental yields
  • Inflation hedge

Cons:

  • High entry and exit costs
  • Ongoing maintenance and management costs
  • Lack of liquidity

Getting Started with Property Investment

To get started, research suitable locations, property types, and price ranges. Consult professionals like real estate agents, mortgage brokers, and property managers to identify potential investment opportunities and navigate the process.

Bonds: Lending Money to Companies or Governments

What are Bonds?

Bonds represent loans given to companies or governments in exchange for a promise to repay the principal sum and periodic interest payments. Investors can purchase bonds to generate regular income and diversify their investment portfolios.

Difficulty, Risk, and Potential Returns

Investing in bonds is moderately difficult, as it involves researching issuers, evaluating their creditworthiness, and understanding bond terms. Risks associated with bonds can vary from low to high, depending on the issuer’s stability. Potential returns are generally lower than shares but offer stability and contain less risk.

Pros and Cons

Pros:

  • Regular income through interest payments
  • Diversification of investment portfolio
  • Lower risks compared to shares

Cons:

Getting Started with Bonds

To get started, research various bond offerings and their issuers, or consult a financial advisor for guidance. Ensure you understand the terms of the bond, including the interest rate, maturity date, and credit rating before investing.

Diversification: The Key to Reducing Investment Risks

Diversification involves spreading your investments across various asset classes and sectors, minimizing the impact of a single underperforming investment. Remember, don’t put all your eggs in one basket. Instead, consider incorporating a mix of cash deposits, term deposits, KiwiSaver, shares, property, and bonds in your investment strategy.

Other Investment Options and Considerations

Beside the above-discussed options, New Zealand investors can explore Managed Funds, Exchange Traded Funds (ETFs), Peer-to-Peer Lending, and investing in start-ups or small businesses.

It’s essential to consider factors such as your financial goals, risk appetite, and investment timeframe before choosing appropriate investment opportunities.

Conclusion: Choosing the Right Investment Opportunities for You

No single investment strategy fits all individuals. It’s essential to carefully assess your financial objectives, risk appetite, and time horizon, and consult financial professionals to tailor an investment strategy that best suits your unique circumstances.

  • Sorted.org.nz: A free, impartial financial guide for Kiwis
  • InvestNow: An online investment platform with access to managed funds and term deposits
  • Sharesies: An easy-to-use share trading platform for beginners

    Conclusion: Choosing the Right Investment Opportunities for You

No single investment strategy fits all individuals. It’s essential to carefully assess your financial objectives, risk appetite, and time horizon, and consult financial professionals to tailor an investment strategy that best suits your unique circumstances.

In this whirlwind journey, you’ve discovered a diverse range of investment opportunities available in New Zealand, including Cash Deposits, Term Deposits, KiwiSaver, Shares, Property, Bonds, and more. Remember, diversification is key to reducing investment risks. Don’t be shy to explore and experiment with different investment avenues to create the perfect blend of assets that can deliver steady, long-term returns.

If you’re raring to seize these promising opportunities, here are the next steps to kickstart your thrilling investment adventure in New Zealand:

  1. Clearly define your financial goals, risk appetite, and investment timeframe.
  2. Assess the various investment options discussed in this guide.
  3. Consult financial professionals for guidance and advice.
  4. Open accounts with relevant financial institutions or platforms.
  5. Start investing and monitor your progress regularly.

As a savvy investor, continuous learning is crucial. Delve deep into investment concepts, strategies, trends, and market dynamics to expand your knowledge and hone your instincts. Stay informed with related guides and resources designed specifically for the New Zealand investors, such as Sorted.org.nz, InvestNow, or Sharesies.

So, my fellow Kiwi investor, are you ready to ride the waves of New Zealand’s investment landscape? The stage is set. The opportunities are rife. Now, it’s time for you to step up, make confident decisions, and steer your financial ship towards bountiful shores.

Go on, take the plunge, and may the wind

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