Best Investment Options For Young Kiwis In NZ

Date May 12, 2021
Blog category Kiwisaver
By Tina M.
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Best Investment Options For Young Kiwis In NZ:

As finance advisors would tell you, it's always best to invest early. Investing in yourself — education, health, skills, and investing to grow your money all have one thing in common: Compounding Interest. Over time, if you're consistent, the "interests" that you get from these good habits will multiply and you will be far better for it.

That's why it's always best to start young. Young investors have more time and flexibility to learn about their successes and mistakes. They have the advantage to study the market and improve their investment strategies while in their 20s. 

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Where to invest right now in NZ?

To start, let’s know the different investment options available for students, fresh grads, and new employees with limited funds. All types of investments will tend to change based on developments in the market, so it’s important to get helpful information and conduct your own research before you start investing. 

  • KiwiSaver
  • Savings Account
  • Shares
  • Managed Funds
  • ETFs
  • Property

KiwiSaver

Putting funds into your KiwiSaver account can give you increased savings that can be utilised for the future. It’s specifically designed to give Kiwis security when they retire. It’s also one of the easiest ways to start investing considering that the Government helps in adding funds to your account.

How does this work?

Once you have your KiwiSaver set up, you can start with your contributions and earn $500 each year. You can choose from any of KiwiSaver’s default banks including ANZ, ASB, BNZ and many more. 

Read more about it here: $500 Of Free Money From KiwiSaver? Here's How

Learn more about KiwiSaver funds when you compare prices here at glimp! 

Savings account

Your savings account can be used for several purposes, may it be for buying a car, a house, or starting a business. If you're still unsure where to put your money, this can be a good start. Your bank may also suggest some real investment options for you, such as a mutual fund or life insurance.

How does this work?

Funds in your savings account earn interest as it stays longer in your account. This interest is considered a small compensation that the bank pays every time they use its customer’s money for lending to other of its customers. Although the money in your account is put to use by the bank, savings accounts are still very secure. The interest rate set by the bank normally increases, which likewise increases the balance of your account.

Shares

Shares or equities are the portions of a company’s value. If you buy fractions of shares that are offered by that company, you’re considered an owner of the said shares that you bought.

How does this work?

Investing in shares can bring you increased funds when you keep them for a long time. When a company does well and becomes more valuable over time and so are your shares. If you’re uncertain where to buy shares online, you can compare investment apps here at glimp.  

Managed Funds

Managed funds are similar to investing in shares, except that your money is combined together with other investors in order to create a larger fund. This allows for stronger buying power and more access to opportunities that may not be available for a single investor.

How does this work?

Since investing in funds can be a hassle, and oftentimes complicated for beginners, professional investors or what we call “fund managers” are the ones who handle your funds. These are the people who directly invest in investment companies here in New Zealand and other corporations overseas. 

ETFs

For those who are looking for a more advanced investment, ETFs or exchange traded funds is the way to go. This is among the fastest-growing investments not only in NZ but in the world. You can buy and sell ETFs on stock exchanges that contain a portfolio of securities where you can track indices such as the top 10 listed companies on the NZ and Australian stock exchanges. 

Index fund vs ETF

ETF can be compared to an index fund in a way that both are mutual funds having portfolios indicating the best-performing companies in the market. However, in an index fund, no transaction fee is needed. Plus, it’s more ideal for retirement accounts, which is a better investment option for those who have multiple investments like shares, properties, and so on.

Property

Another investment opportunity for young professionals is purchasing a property. Although it can be tough buying real estate today, it’s still worth it to look into cheap properties that are located outside of major cities. This can be a way for you to start saving and begin with other investments that can add up to your retirement funds. 

Here are the top places in NZ where you can purchase your first property:

  1. Tauranga
  2. Hamilton 
  3. Rotorua
  4. Greater Wellington
  5. Christchurch
  6. Invercargill
  7. Manawatu/Wanganui

You can turn these residential properties into rentals which can yield 7% yearly or earn at least $70,000 per year. 

You can read more about it here: Best Places To Buy Rental Property in NZ Income from your investments will vary based on the market changes. It’s all up to you on how you manage them. You can also use an investment calculator to measure how much you can earn at a specific period. This way, you can weigh the pros and cons of choosing a particular investment option even while you're young.

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