Beginner's guide to investing outside of KiwiSaver

If you’re comfortable with your KiwiSaver investment, you might start to think about other investment options. Should you invest outside KiwiSaver and what should you consider?

Why invest outside KiwiSaver?

If you’re interested in investing in other areas outside KiwiSaver, first work out if it’s the right thing for you. Friends might be doing it, or it might be a bit trendy, but investment decisions are important decisions, and ones you want to get right for your situation.

KiwiSaver is a great investment tool, and one you’re probably using already. But as your KiwiSaver money is only accessible for your first home or when you reach 65, you might want to invest for other reasons – like an investment property or a financial goal.

You might want to put money into some higher risk, or lower risk investments.

Or, it might just be best to focus on putting more money into your mortgage, if you own your own home.

A financial adviser will be able to help you with this.

There are also online tools that can help. has great tools and guides.

What should I consider for investing outside KiwiSaver?

•   Risk

All investments come with risk – the chance you could lose money. Financial experts say the best way to reduce your risk is to invest in a wide range of different assets, across different risk levels. That way, if one investment is disappointing, another might do well.

For example, you might have a percentage of ‘growth’, or riskier, investments, like shares or property. You might complement that with lower-risk investments, like a savings account, or term deposits, or invest in a conservative fund. All of these investments together make up an investment portfolio.

Risk levels are based on the time you’ll be invested, and how confident and comfortable you are with investing. For example, a portfolio made up mainly of shares will be a growth, higher risk investment, and best for those with a high tolerance for risk, or those investing for 10 years or more.

Risk is also based on how easy it is to get your money back. As you know, it’s not easy to get money out of your KiwiSaver account. So you might want to invest in something because you can get your money back more quickly – for emergencies, for example.

•   Fees and costs

When you invest in a financial product, you’ll be charged fees.

It’s important to know how much you’re paying in fees. If you have a very small amount invested, high upfront fees might not make it worthwhile. You might be invested in a range of similar funds that offer the same level of risk and returns, but you’re being charged multiple fees across them.

It’s smart to know how much you’re paying. Use Sorted’s Smart Investor tool to help you.

What are my other options?

If you’ve decided that more investments are right for you, New Zealand has a range of investment types outside KiwiSaver. These include shares, property, cash - through savings accounts and term deposits, bonds, plus what refers to as alternative investments – things like commodities (gold) or cryptocurrency.

You can earn returns from investments in two ways. One way is putting money into a product or asset, and expecting the value to grow over time. Another way is to invest in assets that generate an income, for example things like bonds, term deposits, and shares that pay dividends.

Investing in shares

When you buy shares, you’re buying a tiny slice of a company. The value of your shares may go up and down over time, but over the long term, you’ll hope they go up.

It can be difficult to decide which individual companies you want to put your money into. For example, do you want to spend NZ$1,000 buying one share of a major US company? To buy individual shares, you can use a share broker, or some online platforms let you buy them yourself.

You can also invest in a fund. These hold a range of different shares, meaning you don’t need to research every individual company. Funds are a great way to diversify your investment, too – so you won’t have all your money invested in just one company, which can help reduce your risk.

You can also invest in shares through exchange-traded funds, which typically are inexpensive and well-diversified. They are usually passively managed, which means they are designed to follow and index, and you can buy them yourself through a broker or online platform.

•   Managed funds

Managed funds generally invest in a range of assets, often including shares and property, bonds, term deposits, and cash. They’re run by a ‘fund manager’.

Pie Funds, the issuer of the JUNO KiwiSaver Scheme, is a fund manager. Pie Funds has a range of different funds outside KiwiSaver that you can invest your money in. Managed funds can be actively or passively managed.

•   Exchange-traded funds (ETFs)

ETFs are usually made up of a collection of shares that follow a market index. One example is the Smartshares New Zealand Top 50 ETF, which tracks the performance of the 50 largest companies listed on the New Zealand Stock Exchange.

ETFs are usually passively managed so are often cheaper, because you’re not paying for an investment team researching, picking and trading individual shares.

Published 25 November 2019

Pie Funds Management Limited is the issuer of the JUNO KiwiSaver Scheme. You can read our Product Disclosure Statement. All content is correct at time of publication date. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. Before relying on it, we recommend you speak with an independent financial adviser.