When you’re thinking about investing, it’s important to understand the different choices you have, where property fits in the investment spectrum, and what the risks may be.

Property is a very popular form of investment in New Zealand, but it’s just one of many ways you can invest your money and grow your wealth.  When you’re thinking about investing, it’s important to understand the different choices you have.

The main types of investments are:

• Cash (e.g. term deposits)
• Bonds (bonds may be issued by the Government or private companies to raise money)
• Managed funds
• Property
• Shares.

Generally speaking, the more risk involved, the higher the potential return.  Cash is the lowest risk investment, with lower potential returns. However, the return is usually constant and cash investments are generally fairly liquid (easy to access).  At the other end of the scale, shares offer the potential for higher returns, but the price of a share can vary quite a lot and there’s a higher risk of losing some or all of your investment.

Property sits somewhere in between.  Overall, it’s considered a relatively safe investment – though as with any investment, there are risks to consider – for example, interest rates could rise, you may be unable to find tenants for a period of time, the property could suffer damage, or the housing market could fall.

Next step | How investing in property works >>

This material is for information purposes only. You should seek professional advice related to your individual circumstances. While The National Bank has taken care to ensure that this information is from reliable sources, it cannot warrant its accuracy, completeness or suitability for your intended use. To the extent permitted by law, The National Bank does not accept any responsibility or liability arising from your use of this information. Our lending criteria, terms, conditions and fees apply.