If not property, where could you invest?

Investing in property has been a popular way for New Zealanders to grow their wealth for decades. But it’s important to know there are also other ways to invest.

4 minute read

Investing in assets like shares and bonds used to be difficult and expensive. But a lot has changed with the recent growth of online investing platforms and easy-to-access managed fund options. Here are some of the popular investment options outside property.

Simplified investing with a managed fund or ETF

If you’re looking for an investment option that is simple and easy to keep track of, you could consider a diversified investment that’s managed by an expert – like a managed fund. Managed funds pool investors’ money together and put it in a range of assets (like bond and shares in companies), often across many global markets. This means you can put your money in a huge range of investments through one simple touchpoint while experts monitor and adjust along the way.

Many managed funds have two types of assets: income and growth. Income assets generally come in the form of bonds, and are lower risk, but with potentially lower returns. Growth assets – usually shares – are higher risk, but with the potential to generate a higher return. You can decide which fund to invest in – which will usually be made up of a mixture of income and growth assets – based on how much time you have to invest and how much risk you’re willing to take.

ETFs (exchange traded funds) are similar to managed funds in that they offer the ability to invest in a large number of assets without needing to buy them all individually. The difference is that ETF units are bought and sold on a stock exchange (such as the NZX), whereas you usually invest in managed funds by giving money to a provider who then converts that into units. These units represent your holding in the fund and are often priced daily.

Investing directly into shares

If you’ve got the time and the knowledge for something a bit more hands on, you could consider investing directly into individual companies by buying their shares. For some people, investing in shares is high risk and complex, and you might need to put aside a lot of time to do your research and get a detailed understanding of the companies you want to invest in.

Share values can go up one day and down the next. This depends on a range of things, including economic factors, competitor activity, as well as company performance. So you’ll need to be ok with the idea of your investment value regularly going up and down. Of course, managed funds and ETFs will also fluctuate in value – but the difference is they’re diversified across a number of assets, which tends to smooth out the volatility when compared to individual companies.

Remember, you don’t get property valued daily, so you shouldn't look at your investment portfolio every day either. We’d suggest reviewing the performance of your investments quarterly or annually, again depending on how long you’re planning to invest for.

The basics remain the same, no matter what the investment

Make sure you choose a type of investment that matches your timeframe and appetite for risk. If you're a long-term investor willing to take some risk, you should have enough time to recover from periods of short-term market weakness, so you could invest in shares or a higher risk managed fund. If you're investing for a shorter time frame or want a lower risk option, you might want to consider investing in something that’s less impacted by market ups and downs, like a lower risk managed fund.

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This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact BNZ or your financial adviser.

Neither Bank of New Zealand nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any information, representation or omission, whether negligent or otherwise, contained in this article.