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Investing can help you achieve your goals, but it can also be quite confusing.

There are five core investment principles to consider when building your investment portfolio. These principles help you make informed investment choices.

1. Know your risk profile

It’s risky to invest in financial markets. There’s a chance the value of investments will rise or fall in value. Do you prefer slow but steady growth, or are you willing to experience ups and downs for potentially greater returns over the long run?

Everyone has a different attitude to money – the key is to understand yours.  We call this ‘knowing your risk profile’.  Try our online risk profile questionnaire.

2. Diversify, diversify, diversify

It’s about not putting all your eggs in one basket. Minimise risk by spreading investments across different asset classes (eg cash, fixed interest and shares) and different fund managers.  A diverse investment portfolio will yield relatively good long-term returns with less variation along the way.

Diversifying across asset classes 
The performance of each asset class is affected by different factors at different times. While one asset class performs poorly, another may perform well. For example, property prices may fall while the sharemarket rises or vice versa. 

Spreading your investments across the different asset classes helps to smooth your returns.

Diversifying across fund managers 
Diversifying across fund managers is another way to reduce your risks in a volatile market. Fund managers have different investment and management styles, which may be more or less suited to certain market conditions.

We have access to a variety of investment options with a range of leading New Zealand and international fund managers.

3. Keep expenses low

All fund managers charge fees for managing your money. Always ask your Adviser what the charges are for your investment choice. What seems a small amount in fees each year can add up and make a significant difference over the long term.

4. Keep investments simple

Always make sure you know exactly what you’re investing in and what to expect. Do you thoroughly understand the product? Don’t be afraid to ask us questions – it’ll avoid misunderstandings and disappointment.

In New Zealand, one of the best and simplest ways to invest is through a managed fund.

5. Stay the course

If you’ve worked through these investment principles and developed a sound investment strategy, then stick with it. Investment markets can seesaw wildly in response to economic and world events. History shows the investor who weathers the storms and stays the course will come out ahead in the end.

Stay the course to achieve your goals.

A disclosure statement is available on request and free of charge.