Spending money to make money – a beginner’s guide on how to invest.

Everything you need to know about investing


Paying off debt and saving money are the cornerstones of financial wellbeing – but when it comes to building long-term wealth, it’s hard to beat investing. Investing means making your hard-earned dollars work for you so you can achieve your financial goals.

But before you go funneling your cash into the latest get-rich-quick investment scheme (or even a managed fund), it pays to school up on the basics. How does investing work? What are the risks? And what’s the best way to get started?

Award-winning financial columnist and author Mary Holm shares some tips and tricks to boost your investment smarts.

Where should I invest my money?

Bank term deposits, bonds, property and shares make up the main investment categories, although you can invest in anything from start-ups and peer-to-peer lending to precious metals and cryptocurrency. Of the four main asset classes, property and shares deliver higher average returns, so investing in them can make a massive difference to how much you retire with. But as Mary explains, they’re also riskier.

“Property and shares dominate in growth and aggressive funds – both in and out of KiwiSaver. But they’re more volatile so you must be able to stick with your investment when its value drops for a while – sometimes for several years,” she says.

Investment house INP

“If you would bail out when the going gets tough, stick with lower-risk bank term deposits and high-quality bonds (which dominate in defensive and conservative funds). Even bonds will lose value when interest rates rise quickly, as we've seen in the last couple of years. But over time they’re less volatile than shares or property. Decide how much volatility you can cope with, invest accordingly, and stick with your investments regardless of what happens in the markets.”

If you’re unsure what type of investor you are, check out the investor profiler tool at Sorted.org.nz 

How to I get started with investing?

“The easiest way to start investing is to use a KiwiSaver fund or, if you want to spend the money sooner, a non-KiwiSaver fund – perhaps run by a KiwiSaver provider. The fund will give you a spread of investments, which is the best way to invest. While some investments in a fund will lose value, or even become worthless, others will soar. And you don't need to worry about picking which shares, bonds, properties and so on to buy.”

Fancy a more hands-on approach? Thanks to the arrival of DIY investor platforms likes Sharesies and Hatch there are now simple ways for everyday Kiwis to take charge on their investment journeys. And you don’t need to earn a fortune to start building that nest egg. Every little bit counts. When you factor in the power of compounding, even small regular contributions add up for your future self.

What are the best investment strategies?

Regularly drip feeding your money is a good approach, because it enables you to benefit from dollar cost averaging (if markets are down you get more for your money, which helps balance out those times when prices are high).

“History shows us that it’s best to just keep investing the same amount on a regular basis into a KiwiSaver or non-KiwiSaver fund. If you receive a lump sum of money, drip feed it into a fund over say three months, regardless of the markets,” Mary advises.

Investment budgeting INP

She also suggests considering timing when making investment plans.

“If you plan to spend the money within the next ten years – perhaps on a first home or in retirement – it's best to avoid shares and property and higher-risk funds. Move to lower-risk investments. And when you’re within about three years of spending, move to the lowest-risk defensive KiwiSaver funds or bank term deposits. By making these moves, you avoid having to sell when the markets are down.”

How do I make sure I’m investing in ethical businesses?

Consider investing in businesses that do no harm (that means not investing in weapons, tobacco or fossil fuels) or, better still, support those that make a positive impact on people, animals and the planet, such as renewable energy companies. Ethical KiwiSaver funds like Pathfinder and Simplicity make ethical investing easy or head to mindfulmoney.nz to check out the moral compass of your current KiwiSaver or investment fund.

How can I learn more about investing?

The world of investing is a complex one but there are a multitude of free online tools, websites, blogs, podcasts and more to help you build your knowledge (and bank balance). moneyhub.co.nz and moneykingnz.com have invaluable guides, reviews and resources or check out the entertaining and informative NZ Everyday Investor podcasts, designed to help everyday Kiwis develop wealth. Click here for an up-to-date list of the country’s best investment blogs and websites visit.

Top tips for new investors

  • Make the most of KiwiSaver. If you’re an employee aged between 18 and 65 and putting in 3% of your pay, the extra money your employer and the Government contribute will roughly double your money. That could mean retiring with $100K instead of $50K, or $500K rather than $250K. Wow! Even if you’re not an employee you still get the Government contribution. That’s 50 cents for every dollar you put in, up to $521 for your $1042.
  • If you can save more than 3% of your pay (for employees) or $1,042 a year (for others), and you have a mortgage or other debt, put extra money into reducing the debt. If you have no debt, it's a good idea to put extra savings into a non-KiwiSaver fund, so you can access the money if you need to – unless you are likely to squander it, in which case tie it up in KiwiSaver!
  • Choose a low-fee KiwiSaver fund. They perform just as well as the high-fee ones, and fees can make a big difference over the years. For information on what fees are charged, see the Smart Investor tool on sorted.org.nz


Story by Vanessa Trethewey for the Summer 2023 issue of AA Directions Magazine. Vanessa is an Auckland-based freelance writer.

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