The ‘Main Four’.

New Zealander’s are explorers, we love to adventure out and spread our wings. However Kiwi’s typically stick to five main assets when investing. 

- Cash

- Shares

- Bonds

- Property

My preference is obviously property and for as long as I believe it is the best asset to grow sizeable wealth, I will advocate for it. However, it is important to understand the other three and why they are explored by Kiwi’s.


It is what we know as kids. Opening a savings account at a young age – mine was at the local Southland Building Society bank in Invercargill at six years old. I would gamble that most children had a cheeky five dollar note, by way of a parent’s gift, to put in their first account. What we didn’t realise as six-year olds was that we were investing. Back in the 90’s it would take 15 years to double that five dollars to ten with the 5% interest rate on offer. Nowadays? It will take you 97 years at the current usual savings rates of about 0.75%. My thinking? Even with immortal science progressing, why bother?!


New Zealand is in a recession, along with the majority of the world. One different factor in this recession so far is the over whelming strength of the share market here and around the globe. But is it built on straw? One key difference in the share market this time around is the ability of everyday kiwis to purchase shares through websites such as ‘Sharesies’ or ‘Hatch’. The NZ share market, as witnessed in our Kiwisaver’s, has had an incredible 10 year run, however 10% is a good guide of investment return over the long term. Back to the straw comment, I fear there is an element of ‘FOMO’ – fear of missing out, that is hyper-inflating share prices. One hopes it doesn’t come crashing down.


Ever wondered how the NZ Government borrows money? You would be right in thinking that a lot of it is from overseas. As well as calling on foreign debt, the government produces what is called a ‘Government Bond’. Simply, it is a piece of paper with an amount of money on it that the government wants to borrow from someone. They put these on the open market, and everyday Kiwi’s can purchase them, with the promise that the government will pay that person interest over the life of the bond. Now usually, you and I might invest in these (so in effect investing in our government or country), however as part of the Reserve Bank of New Zealand’s response to Covid-19, it has decided to spend about $100 billion on buying these government bonds. How can they afford that? Well they can’t – so they are doing what is called ‘Quantitative Easing’, or in other words – printing money! Literally off a printer. 

How does all this effect you and I? Due to the Reserve Bank buying all the government’s debt, we have very limited access to invest in it ourselves.


My house, my castle. It seems to be sub-consciously taught to us growing up that owning a home is the be all and end all. It’s not, but it does provide shelter, security, responsibility and a sense of proudness. It is also an amazing investment tool, simply because of one major aspect – leverage. 

Unlike the other three asset classes we discussed, you are able to leverage the banks money as well as your own to purchase an asset that is more expensive than just your own money. 

When you invest in shares or bonds you can only invest the money you have on hand, let’s say $100,000. The same is obviously true with the bank as well. 

However, this is where property is unique. We can take that $100,000 and convince the bank to lend us four times more than that to purchase a property worth $500,000, whether it be your own home or an investment property.

On average over the last 20 years, the New Zealand property market has increased in median house price by 6% each year. We typically use 5% as a guide to be conservative.

$500,000 worth of property going up by 5% a year, is more than $100,000 of shares going up by 5%, or even 20% a year!

So why Property?

Investment Type   Your amount    Banks Amount    Typical Return    Return 1st Year

Cash                               $100,000                    $0                            0.75%                     $750

Bonds                            $100,000                    $0                            0.25%                     $250

Shares                            $100,000                   $0                             10%                     $10,000

Property                        $100,000              $400,000                        5%                     $25,000

We will leave the fundamentals of actually how to make an investment property work for another day, but everyone always says to me, “But Toby we can’t afford a deposit for an investment property and we also can’t afford a second mortgage”. 

It’s a fair point and you may be right on the first part of that – that’s where a beautiful thing called ‘Usable Equity’ comes in which is something we will cover next, but I can all but guarantee you that you can afford the second mortgage and it may not cost you as much as you think

Read on to learn why!

Read: Deposits & Equity

What the heck do those terms mean?

Quantitative Easing: Printing money because we don’t have enough of it already. It pumps money into the economy and allows government to be able to invest in projects, infrastructure, social policies and the country.

FOMO: Fear of missing out. In times of recession, human nature is to try and find a way out, to improve our situation. In a financial sense this is usually done one of three ways:

- Paying down debt.

- Working more hours.

- Investing.

When lots of Kiwi’s go to invest, demand goes up therefore the price of the investment we are purchasing goes up too as people start offering crazy prices, especially in Property and Shares, to simply get their hands on the investment. This is all created by the fear of ‘I will miss out’.

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