If you want to start your investment journey, you’re in luck. There are a wide array of investment options available in New Zealand.
The easiest and most obvious choice for NZ investors is of course, KiwiSaver. Almost anyone can apply and even have the choice to grow their funds however they want to. Aside from this, there are plenty more options to choose from! Time to start diversifying your growth channels. Take a look at these different types of investments in New Zealand.
Cash is the simplest form of investment you can take advantage of in New Zealand. This includes a wide range of categories including daily bank accounts, high-interest savings accounts, and term deposits. Compared to other investment types on this list, they typically have lower returns of investment (ROI).
With these characteristics, cash offers offer low to no risk in your investment portfolio. It doesn’t offer capital growth, but it plays an important role in preserving your assets. Although, do note that most ROIs from cash are beaten by inflation, which isn’t ideal for long-term investments.
Bonds are the second most widely-available investment in New Zealand. With some lenders, they’re usually referred to as a fixed interest investment. This is a type of debt or a loan made by an investor to a borrower. This works as the borrower issues a fixed interest rate or coupon to the lender in exchange for the capital.
They’re often used by corporations to secure funding in their projects. Unlike cash, bonds are sold very early as prices can always go up and down. The investment’s risks depend on several factors including the amount of bonds, the issuer of the loan, and more.
Shares are a great investment for growing your original investment over the medium to long term period. Simply own shares from a listed company in the New Zealand Stock Exchange (NZX) and receive income through dividends. Essentially, this is a portion of the company’s revenue paid out to you for entrusting your money with them.
The value of your ROIs depends on the value of your shares, which also varies according to the financial performance of the company. The market is very competitive, making it volatile every day. This classifies as shares one of the riskiest investment types in New Zealand.
Another investment type that’s perfect over a medium to long term period is properties. The value of property always appreciates, especially in NZ where the housing market is very competitive. This makes it a great value to place your hard-earned money for investment. However, this may be more complicated than other investment types in this list.
First off, you may not earn any ROI if you’re living in your property in real-time. You can only earn some money if you either rent it or let it mature to sell it at a higher price. Plus, you have to pay for mortgage, maintenance fees, taxes, among other costs, which may lower your returns.
Mutual funds are an investment type where investors pool their money to purchase securities. Different types of mutual funds include equity funds, fixed-income funds, balanced funds, money market funds, among many others. This gives small-time or individual investors the same opportunity as big companies when it comes to access to professional portfolios.
Unlike popular belief, they’re not entirely passive as some of the funds are managed actively by professional portfolio managers. They allocate and distribute your investment into stocks, bonds, and other types of securities for your money to bear ROI.
Managed funds are financial products that lets you buy shares, properties, term deposits, cash, and other investments. Usually, you have a fund manager that decides the growth of your fund. One popular example of this is KiwiSaver. Aside from this, other managed funds that fall into this investment category are income fund, NZ growth fund, and more.
Whenever you buy units in managed funds, your savings are spread across different shares and investment within the limits of the fund. This makes your money ‘diversified’ as not all your money in one fund. This makes the risk lower than other investment fund types.
Exchange Traded Funds (ETF) works similarly to mutual funds, but they’re traded on the NZX daily. They’ve become more common as they adopt a simple concept of mirroring the behaviour of stocks. This means the value of your investment can change over the day. Under this investment type is Nikko AM’s Ark Disruptive Innovation Fund.
The great thing about ETFs is their ease of trading and broad coverage. You can easily track the underlying index including starting markets and commodities. That’s why it’s one of the most preferred investment options for Kiwis looking for aggressive growth.
Cryptocurrency is one of the newest investments made available for New Zealanders. Unlike traditional investments that deal with physical money, crypto deals with virtual money such as Bitcoin, Ripple (XRP), and Monero (XMR). What’s great about crypto is the freedom you can achieve in your investment.
Typically, there’s no middlemen or fund managers that make the decisions for you. This means your ROIs are always based on your trading decisions. On the downside, you may not earn great ROIs if you lack knowledge about cryptocurrency investments.
Ultimately, this depends on your needs. Each investment offers different risks, growth, and returns. It’s essential to know them before fully investing your money. Otherwise, you may suffer from financial troubles later on.
Fortunately, you can get help in your investments, right here at glimp. We have different investment apps that you can compare. Get customised results in your best investment options using our comparison tool.
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