Investing is a great way to build wealth from the money you have saved, but for a beginner the multitude of investment options can feel intimidating. Let’s have a look at the basics of investment strategy and how you can start to make the best investment decisions for your future.
What is an investment strategy?
Your investment strategy is the precise mix of assets in which you choose to invest your capital across an investment portfolio. There are four main types of assets to which you can allocate your money, each with a different level of risk and returns:
- Cash: This includes bank deposits or savings accounts and is regarded as one of the lowest-risk investment options. Your investment will be secure – however, there will be limited growth.
- Bonds: This includes corporate bonds or government bonds stocks. Bonds pay you a set regular interest rate, and when held until the bond’s maturity you receive your money back from the issuer. One reason bonds are lower risk than shares because bondholders are ahead of shareholders in the queue to receive their money back if the entity you’re investing with becomes bankrupt.
- Property: Investments in property or real estate can provide both income and long-term growth. However, they are considered higher risk investments as they can have variable returns, particularly over the short and medium term.
- Shares: This includes overseas, local, private and publicly listed shares, often referred to as stocks or equities. While returns are likely to be higher over a long period, this is often offset by fluctuating short and medium term returns.

The general aim of a successful investment strategy is to get a return that is considerably higher than inflation and any fees or taxes that may apply. It is normally the accepted rule that the higher the risk in your investment strategy the more growth you’ll experience over time. However this can bring with it uncertainty and the possibility of losses. A robust investment strategy, should therefore balance your immediate income needs with your appetite for risk and the possibility of growth over your lifetime.
Deciding on your own investment strategy is a complex task and one which will take into account your unique goals and personal circumstances. The best results are most often achieved in conjunction with a financial adviser who can help you to navigate the market environment and hone your strategy to achieve your desired outcomes.

What are my investment options?
There are a wide range of investment options when it comes to implementing your investment strategy, each with their own advantages.
Firstly, you will have to decide whether you want to manage your own investment directly or whether to put your money in a managed fund. A managed fund is one that pools together contributions from all of its members and then governs which assets to invest in based on the specific objectives of that particular fund. Essentially, you pay fees to have your investment managed for you by investment experts.
New Zealand offers a variety of managed funds, with the most popular being:
- KiwiSaver Funds
- Unit Trust Funds
When deciding on a managed fund it’s important to compare their various features and how these will fit into your financial goals.

How to determine the right strategy for you
There are several core questions you will need to find a strategy that will work for your individual circumstance:
- What do you want to achieve? Are you saving for retirement or for a first home? Different goals require different strategies. Understanding them before you start will help you to establish what level of return and risk you need.
- What is your risk profile? The more risk you incorporate the greater fluctuation you should be prepared to see in your investment value. Although the trade-off is generally higher returns over the long term. You can find your risk profile here.
- When do you want to withdraw your funds? The longer your time frame for investment the more risk you are able to take.
If you’re looking to start your investment journey and get the most out of your investment strategy, get in touch with the experts at Milford Asset Management. Our experienced team can set you on the path to success.