Investment options

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Cash investments

Cash investments can contribute to a well balanced portfolio by reducing your overall risk and providing ready access to your money. They typically provide a low return over time and offer no scope for capital growth. Cash is suited to investors with a short time horizon.

Fixed interest

Fixed interest investments are generally regarded as a relatively low-risk investment and have historically provided lower returns than shares and property. They pay a regular interest income for the term of the investment, which can be appealing in times of uncertain market performance.

Suitable for

Fixed interest is best suited to investors with a short to medium time horizon, where the investor would not have an immediate requirement for the funds, but would need a stable interest income.

How it helps

Incorporating cash and fixed interest within your investment portfolio can help to reduce the impact of market fluctuations, whether you invest directly into these products or invest via a managed fund.

Examples of cash and fixed interest investments

• Bank accounts
• Bank bills
• Cash funds.

Property investment can be profitable, however it is susceptible to fluctuations in market demand. Investors wishing to enter the property market can do so via property investment loans or by using the equity in their own homes.

Managed fund portfolio

Another way to enter the property market is by incorporating property trusts into a managed fund portfolio. Property trusts typically invest in commercial, retail and residential properties that would otherwise be out of reach for most individuals. Property is generally a moderate risk investment and is best suited to investors with a long-term investment timeframe.

Examples of property investments

• Houses
• Commercial property trusts
• Property securities
• Property funds.

New Zealand and international shares

Historically, shares (otherwise referred to as equities) have generated higher overall returns than all other asset classes.

Shares are easily traded, which makes them a flexible investment. However, with their potential for high returns comes a higher risk of market fluctuations.

Shares can also be used as part of a managed investment portfolio.

As the value of shares can fluctuate significantly, share investments are generally suited to longer-term investors with a higher risk tolerance.

Managed funds pool investment funds from many investors then invest the total amount across a range of asset classes, ranging from shares to listed property trusts, bonds and cash.

How it works

By using different mixes of these asset classes, a portfolio can be designed to meet your individual investment objectives. Managed funds can be used to invest a single lump sum or smaller, regular amounts as part of a regular investment plan to reach your short, medium and long-term goals.

Benefits

The benefits of investing in managed funds include:

• usually only a small investment is needed to start
• access to markets such as international shares and large-scale property developments that may not be achievable as a sole investor
• diversification across a range of asset classes and fund managers
• fund manager carries out day-to-day administration and investment research.

Retirement funds

Another way to invest in a managed fund is through superannuation. Find out more through your Private Wealth Adviser.