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Ready to start investing money? The next step is to make sure we do a good job of it and get the highest returns from our investments. Here are key questions to consider when deciding where to invest and what to invest in:

How long do we want to invest for?

How long we invest our money for is called duration. A short-term investor (1 to 3 years), is better to look at a more stable investment product that offers consistent returns. If investing money for the long term (10 years plus), we probably have time to go with the ups and downs of shares and property investing for the promise of better returns. Here’s more about duration in investing.

Do we need to get our money out quickly?

How easily we can turn our investments into cash is called liquidity. For example, a bank savings account is a high-liquidity investment because we can get to our money easily and probably won’t have to pay any penalties for taking it out. Low-liquidity investments include property (because it takes time to sell and may be expensive) and superannuation schemes where our money is locked in until we retire. Here’s more about liquidity.

Do we need income from this investment?

If we’re after a regular income from our investment, it’s best to put the money where we can have more certainty about the interest it will earn, such as a bank deposit or a bond paying a fixed amount of interest for a set period. But if we want our money to grow as much as possible, we could consider more volatile investments such as shares or property, which potentially offer higher long-term returns but fluctuate in value over time. Here's more about returns.

What are some different kinds of investments?

It’s a good idea to understand the different kinds of investments, like:

For more, the site has short videos about the on-ramp to investing. And the Financial Markets Authority has information about more complex kinds of investments. Here’s more about the different kinds of investments.

What are the different ways to invest?

We can invest directly ourselves. This requires higher levels of research on our part, and we’ll need to be well informed. We can also invest using managed funds, where our money is pooled with that of other investors. This relies on a professional fund manager to invest for us. There are many different forms of managed funds for different goals, and KiwiSaver is one example. Here’s more about managed funds.

What are our options for getting advice?

We can get investment advice from a range of people, including financial advisers, insurance companies, sharebrokers and banks. Check that the adviser is authorised to provide what we need. For investments like KiwiSaver, managed funds, shares or bonds, an authorised financial adviser (AFA) is best placed to help. Advisers who work for a company that is a qualifying financial entity (QFE), like a bank, can also provide investment advice, but only on products provided by their QFE. These may include KiwiSaver, managed funds and savings accounts. Here’s more about getting investment advice.

What risks are we taking with this investment?

No financial institution or investment is entirely risk-free, but the level of risk  can vary greatly. If an investment seems too good to be true, it probably is.

The main risk is that our money may not be there when we need it. Our investments could lose value or wemay not receive all of our money back.

Lower-risk investments like bank deposits are less likely to decrease in value than higher-risk investments like shares. But if we can tolerate higher risk, there may be a better chance of achieving a greater return in the long run.

Some investments like bonds may be given a rating by an independent agency. These ratings are a useful tool in an overall assessment of the investment risks.

What costs come with this investment?

Knowing the fees involved with investing is important. So is knowing how we’ll be taxed on our investments. 

Weigh the fees being charged against the likely return from the investment. How much seems reasonable to pay?

The fees information can be found in the investment statements – good investments will be transparent.

For KiwiSaver investments, our KiwiSaver fees tool can help