Three main asset classes: (link to more information on each of these)
- Fixed Interest/Cash
Each of these asset classes will perform differently in different markets, so it is important to have an exposure to each type. How much of each one you will have in your investment strategy will depend on your risk profile.
‘Fixed Interest/Cash’ includes term deposits, but also includes listed bonds, government stock, bank bills and other types of fixed interest.
‘Equities’ is just a flash word for shares.
‘Property’ is not just your home (which we don’t include as an investment as you have to have somewhere to live), or other residential investment properties, but also includes investments in office blocks, retail (shops), wholesale (warehouses). Making sure that you can access your money when you want, we use managed funds and listed property investments, so that you know that you can move your money easily and get access to it when you need it.
Diversify between New Zealand and Overseas companies. The Gross Domestic Product of New Zealand is worth only 0.14% of the total world GDP. Our financial markets are similarly just as tiny. By limiting your investments to only New Zealand, you are limiting your returns from companies that are truly global (and that you might use in your day to day life like Facebook, Apple, Amazon, Nike) and have more growth potential.
Use different fund managers. A fund manager is someone like Milford, or ANZ, or Magellan. These might be names that you have heard of. There are many fund managers (or investment managers) available for you to invest in, but very few offer ‘retail’ investments in New Zealand. The best way to invest with these outstanding fund managers is through a WRAP (Wealth Retirement Accumulation Platform) through a financial planner.