Why different goals need different investments

At any stage during your life, you’re likely to be working towards a few different financial goals. This article looks at how different investments can help you achieve them.

4 minute read

Goals are helpful for a number of reasons. They help us get the things we want, they give us direction and purpose in life, and they also give us a sense of achievement when we reach them.

That’s why it’s worth putting some thought into how you’ll reach your goals.

Goals come in all shapes and sizes and most people have several on their list at the same time. For instance, if you’re young, you might be planning a big holiday, saving for your first home, and thinking about fixing those strange noises coming from your car before things get worse.

Having several goals bouncing around in your head can make it hard to know where to start. By planning things out, you’ll get a clear picture of what you need to do, and the types of savings or investment accounts you might need to use to help you reach your goals.

Emergency fund

It’s a good idea to have an emergency fund for the unexpected things life throws at you from time to time. That way, you’ll be ready and you won’t feel like you’re taking money away from more important things.

Short-term goals

This could be something like a new fridge, a new car, or a holiday you want to go on with friends.

Long-term goals

These are often the big-ticket items like a deposit for a house, an education fund or retirement.

Planning for your goals

Once you’ve listed your goals, put dollar amounts against them, and worked out how much you can realistically afford to put aside each week/month then you can start to think about the best place to save or invest to reach each goal. Depending on what they are, you might need to use a few different types of accounts.

Savings account

A savings account gives you quick access to your money. It can be a good option for a short-term goal such as a holiday. Some savings accounts, like Rapid Save, can help you get to your savings goals by earning you interest on your balance. Generally though, savings accounts provide lower returns than other investment options.

Term deposit

If you’ve built up some savings and you won’t need to touch them for a while, you can lock them away in a term deposit for a set amount of time and get a guaranteed return. This can be a good option for short-term goals, or if you’re looking for a lower-risk investment option.

Managed fund

A diversified managed fund will invest your money in a mixture of growth assets and income assets – these are things like shares in companies, and bonds. Your balance can go up or down so it’s important to choose your fund based on how comfortable you are with risk, and how long you have to reach your goal. Riskier funds have the potential to produce higher returns over the longer term. So, if you’ve only got 3-5 years to reach your goal, a lower-risk fund with lower returns may be a safer approach. If you have a long time until you need the money, then a fund with a higher allocation to growth assets could be the right approach. You can read more about managed funds like YouWealth here.

KiwiSaver

A KiwiSaver fund is a managed fund. So, you should also think about your appetite for risk and the timeframe. KiwiSaver is designed for your retirement savings so your money is usually locked in until you turn 65. However, eligible members can get their money out early to put toward the purchase of a first home. One of the best things about KiwiSaver is the Government can chip in too (eligibility criteria apply).

Once you have your plan worked out and your savings are in the right option for your needs, you’ll be right on track to reach your goals.

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References to third party websites are provided for your convenience only. BNZ accepts no responsibility for the availability or content of such websites.

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. While BNZ has made every effort to ensure that the information provided is accurate, neither BNZ nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this article.

BNZ Investment Services Limited, a wholly owned subsidiary of Harbour Asset Management Limited, is the Issuer and Manager of the BNZ KiwiSaver Scheme, YouWealth and BNZ Term PIE. Download a copy of the Product Disclosure Statements below:

• BNZ KiwiSaver Scheme Product Disclosure Statement (PDF 1.1MB)
• YouWealth Product Disclosure Statement (PDF 1.4MB)
• BNZ Term PIE Product Disclosure Statement (PDF 846KB)

Investments in the BNZ KiwiSaver Scheme, YouWealth and BNZ Term PIE are not bank deposits or other liabilities of Bank of New Zealand (BNZ) or any other member of the National Australia Bank Limited group. They are subject to investment risk, including possible delays in repayment. You could get back less than the total contributed. No person (including the New Zealand Government) guarantees (either fully or in part) the performance or returns of the BNZ KiwiSaver Scheme, YouWealth or BNZ Term PIE, or the repayment of amounts contributed. National Australia Bank Limited, the ultimate owner of BNZ, is not a registered bank in New Zealand but a licensed bank in Australia and is not authorised to offer the products and services mentioned on this webpage to customers in New Zealand.

BNZ Investment Services Limited (BNZISL) uses the BNZ brand under licence from Bank of New Zealand, whose ultimate parent company is National Australia Bank Limited. No member of the FirstCape group (including BNZISL) is a member of the NAB group of companies (NAB Group). No member of the NAB Group (including Bank of New Zealand) guarantees, or supports, the performance of any member of FirstCape group’s obligations to any party.

For term deposits, account opening criteria, terms and conditions, apply.

Account opening and lending criteria, terms and fees apply. BNZ standard terms and conditions apply to all BNZ transaction and savings accounts. Details of our fees can be found in our Fees Guide. Rates and fees are subject to change.

The Rapid Save rate is only available only for your first $5,000,000 of total deposits held with BNZ. For amounts over $5,000,000, visit us in branch to see how we can help.