The Best Ways to Invest Money in NZ

There are many ways to invest money in New Zealand, from property, and index funds, to gold, and shares. A diversified portfolio could include several of these asset options, but the tricky part is choosing the right ones. To help you get started we’ve put together a guide to the 8 best ways to invest money in NZ.

But first, a few things you need to know

• Investments that generate higher returns typically go up and down in value more quickly and frequently. In other words, they tend to be more risky and volatile. Read more about risk.
• Your investment horizon is the length of time you plan to stay invested. Generally, more volatile assets like shares require a longer time frame to ride out market ups and downs, while less volatile investments like cash and bonds are better suited for short to medium term goals where you need more price stability.
• Diversification, or investing your money in a variety of assets, is essential to spread risk and reduce volatility. Read more about how you can diversify your portfolio.
• The first step towards investing successfully is to be able to put money aside regularly. Read more in our guide to saving.
• The next step is to gain as much knowledge as possible. The more you can read about investing from authoritative, trustworthy sources and experts, the better. Read our guide to starting investing.

Financial markets are tracked in detail every day by millions of indices (indexes). These indices are designed to reflect the collective performance of companies in the market or a part of the market. For example, NZ has the S&P/NZX 50, and the US has the S&P 500.

Index funds are designed to track a chosen index and match its performance by holding the same proportion of companies listed in the index. This means when you buy units of an index fund, you’re buying shares in every company in that index and earning a return from their collective performance.

Who should consider investing in index funds? Index funds are a great option for the majority of investors, as they have a low barrier to entry, low fees, and can provide instant diversification. Many Kiwis choose to make index funds the core of their portfolio (80-90%), then add exposure to other assets with the remaining 10-20%. Additionally, many KiwiSaver providers like Kernel also enable you to invest your KiwiSaver funds into index funds.

Read more about how index funds work

• Provides instant diversification to some degree, as these investments are made up of shares in lots of companies.
• Lower fees than most other investment options, including managed funds. Kernel provides index funds with management fees as low as 0.25% p.a.
• Frequently outperforms many managed funds over the long term when fees are taken into account.
• You can start investing with as little as $1.
• Typically, more tax-efficient than ETFs in New Zealand.

• Vulnerable to downturns in the stock markets, like most other types of funds.
• May limit investor choice to established investment options.

KiwiSaver is a government-backed investment scheme geared towards retirement. You can buy many different types of investments in your KiwiSaver, from individual shares and ETFs to managed funds and index funds.

What makes KiwiSaver such a great scheme is that you can choose to automatically contribute 3.5%-10% of your salary, and your employer must contribute a minimum of 3.5% of your gross salary. The government will also match 25 cents of every dollar you contribute, up to a maximum of $260.72 (if you contribute $1,042.86) if you earn under $180,000 in the previous tax year. You also can’t touch your KiwiSaver in most cases until you’re 65, which limits impulse withdrawals, helping you in the long run.

Who should consider KiwiSaver? The vast majority of Kiwis should consider being in KiwiSaver, as it’s a fantastic way to grow your wealth for retirement with a little help from the government and your employer. The trick to making the most out of your KiwiSaver is to contribute as much as possible and be in the right fund for you.

Read more about how to choose a KiwiSaver fund

• Contributions from the government and your employer
• Easy to join, and contribute, your employer will deduct from your salary
• Not accessible until 65 in most cases, which makes it easy to leave your investments to grow until retirement.

• Accessing your KiwiSaver balance before 65 or buying your first home is difficult and only possible in certain circumstances.
• More limited options for investment types and providers.

Actively managed funds are led by investment teams that hand pick every asset in a portfolio. Similar to index funds, your money is pooled with other investors, but instead of tracking an index, a fund manager makes ongoing decisions about what to buy or sell, and monitors when to do it. Their goal is to use this active decision making to outperform a specific market benchmark or index.

Managed funds are often grouped by their strategy. For example, cash funds target stable returns, and low volatility, while growth funds target higher returns and volatility. In New Zealand, most KiwiSaver funds are actively managed funds, but they can also be bought outside of KiwiSaver.

Who should consider actively managed funds? Actively managed funds can be a good option for inexperienced, time poor investors who don’t want to make investment decisions, but because they are actively managed by an investment professional they typically charge higher fees.

• A diversified portfolio since managed funds typically hold a range of different investments.
• A professional fund manager does the homework and chooses investments for you.

• Higher fees than most index funds and ETFs.
• Frequently, lower long-term returns than passively managed alternatives after fees are taken into account.

ETFs are investment funds that contain a basket of stocks, bonds, commodities, or other assets rolled up into one, a bit like index or managed funds. The difference is, they’re listed on an exchange just like stocks (hence exchange traded).

These investments are easy to buy and sell, and instantly diversified. They’re also cost effective, and are typically passively managed (but not always).

Important note: Not all ETFs are index-tracking. While the terms are often used interchangeably by many, it’s important to know that ETFs can be actively managed as well. So it’s important to do your research.

Who should consider ETFs? Most investors may consider ETFs, as they’re a great way to gain low-cost exposure to a diverse array of assets and markets. They may be best as a smaller, satellite portion of an investment portfolio, as they’re typically not as tax-efficient as other options like index funds.

Read more about investing in ETFs

• More liquid than index funds: Unlike unlisted index funds, which are priced once a day, ETFs are traded on a stock exchange. This means you can buy and sell them at any time during market hours at the current market price.
• Variety: ETFs offer hundreds of ways to gain exposure to specific markets or niche sectors, which may not be available through local options.
• Instant diversification: One ETF can give you ownership of hundreds to thousands of companies across industries and countries.

• Premium/ Discount to NAV: The price you pay for a unit/share is determined by what you offer or accept to the buyer/seller, often an institutional market maker. This will often be different and a spread to the NAV (Net Asset Value, being the actual value of a unit according to the assets it represents. Often you will pay a premium to buy and incur a discount to sell, which might be small (“tight spread”) or large (“wide spread”) and impact your performance by adding to your cost of investing
• Tax Complexity for NZ Investors: Many popular ETFs are based overseas (e.g., in the US or Australia). For Kiwis, this can make them less tax-efficient than local PIE-structured index funds, potentially involving more complex tax rules like the Foreign Investment Fund (FIF) regime.
• Brokerage Fees: Because they are traded like shares, you may have to pay a brokerage fee every time you buy or sell, which can add up if you are making small, regular contributions.
• Foreign exchange fees: depending on where the ETF is based, you may need to convert from NZD. This often incurs fees on top of brokerage fees, depending on the platform.
• More visible market movements: Since they trade live on an exchange, their price can fluctuate throughout the day, which might tempt some investors into "market timing" rather than long-term holding.

When you buy a share from the share market, you’re buying a little piece of a company. As the holder of a share you may receive a portion of the business’ profits (dividends), or you might make a capital gain if the value of the company and therefore those shares increase.

Generally shares increase in value if a company is profitable, has potential for future growth, and if investors feel positive about its future performance. Shares can be a very lucrative investment, but they’re also very risky, as their performance is tied to the fortune of one company (in other words, all your eggs are in one proverbial basket).

Before you buy a share, it’s a good idea to do your homework on the company to make sure it’s a sound investment for you - and if you’re only buying shares, you’ll need to do your homework on how you can diversify your portfolio.

Who should consider shares? Individual shares are high-risk investments, and choosing which ones to buy requires advanced knowledge, and time consuming research. There are also elements of information availability and luck that have an impact. For that reason the vast majority of investors may be better off holding only a few shares as a small portion of their portfolio (say 5%-10%).

Read our guide to buying shares in NZ

• Shares have a very high return potential IF you choose well. That’s a very big if!
• High level of control over what you invest in.
• Usually easy to buy or sell at any time, or in other words, very liquid.

• Very high level of risk particularly if you’re not diversified.
• Diversification is difficult and time consuming, generally requiring purchase of 20+ companies.
• Best for experienced investors because shares require extensive research and management.

Governments, councils, and companies issue bonds when they need to raise money, and in return they agree to pay you interest for a certain amount of time - plus the original face value of the bond when that time ends (when the bond matures).

You can sell these before maturity, but the price can go up or down on the bond market.

Bonds usually aren’t the highest returning investments, but they’re often more stable, reliable short/medium term bets.

Who should consider bonds? Bonds are generally considered a good option for short/ medium-term investments (as opposed to shares or ETFs) as they tend to be less volatile.

That said, they’re not without risks and should always be chosen carefully, with full knowledge of what you’re buying. Most beginner investors should consider index funds, managed funds or ETFs that hold bonds instead of buying individual bonds.

Read the Kernel guide to investing in bonds

• Considered less volatile and risky than shares and some ETFs.
• Pay a steady interest rate that’s stated in advance so you know what to expect.

• Returns are generally lower than shares so usually best as a shorter term investment.
• They can fall in value especially if current market interest rates increase.

For better or worse, New Zealanders are obsessed with property, but what’s it like as an investment? The barrier to entry is very high, so it’s only an option to those with money in the bank, or equity in an existing property.

If you bought an investment property for $910,285, the average price in NZ according to QV as at January 2026 with the required 30% deposit, you’d need well over $270,000.

You’ll need to apply for a mortgage, search for properties, and purchase one, then either manage the property yourself, or hire a property manager to do it for you.

Next you must file a tax return, pay for repairs and maintenance, cover extra costs when tenants leave, and pay a large sum to a real estate agent if you want to sell. In other words, property is the most involved, and difficult investment on this list… but it can be very lucrative if you do your homework, buy well and tread carefully.

Who should consider property? Property can be a great investment, but for many Kiwis, it can be out of reach.

If you can afford to invest, it’s important to take care when purchasing and managing a property and run your numbers in detail. OR if you're keen on exposure to property but don’t have a $270,000 deposit handy, consider an index fund or managed fund that invests in real estate companies like the Kernel Global Property fund.

• Ability to borrow to purchase property can increase the size of your returns.
• Everyone understands property, and everyone needs a roof over their heads!

• Extremely high barrier to entry in terms of cost and knowledge.
• Extra risk due to requirements for high borrowing.
• Very involved and time consuming (possibly stressful), especially for beginners.
• Borrowing to purchase can equally increase the size of your losses

Term deposits are essentially an agreement with a bank to keep your money locked away for an agreed period of time, in exchange for a fixed interest rate. These interest rates are usually higher the longer the term. If you want to withdraw your money before the term ends, you may not be able to or be charged a penalty, which is usually a forfeiture of some or all of the interest earned.

Who should consider a term deposit? If you’re keen on minimum risk and a guaranteed return, term deposits aren’t a bad option - especially if you know you won’t need the money. That said, they do tend to have low returns, which are often lower than inflation.

Hot tip: cash funds can be a flexible alternative to term deposits or savings accounts. Read more about these options here.

• Extremely low risk with guaranteed returns.

• May not be tax efficient - Interest earned is taxed at your highest marginal tax rate.
• Inflation may be higher than your term deposit return, which means you could earn a negative return in real terms.
• No access to money for the length of the deposit term.

Ready to start investing? The Kernel platform offers access to shares, ETFs, index funds, KiwiSaver, savings accounts, bond funds, property funds and more.

Kernel Wealth Limited is the manager and issuer of the Kernel KiwiSaver Plan and Kernel Funds Scheme. A Product Disclosure Statement is available at Kernel Wealth | Resources & Documents. Investing involves risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time. The information provided should not be relied upon as investment advice or recommendations and should not be considered specific legal, investment or tax advice.