Investing for Young People: Shares, Bonds, Property. Where Do I Start?

So, you’ve heard about the potential value of investing and want to jump on the compounding bandwagon. But there’s a problem: you’re in your 20s, and you don’t really know how to invest or where to start. Canstar breaks down the ins and outs of investing.

The word investing is getting thrown around a lot these days, so it isn’t surprising a growing number of us want to know more. But if it isn’t a world you’ve already dabbled in, investing can feel like a bit of an inside club. So what exactly is it, how much money do you need to get started, and what are the risks? 

What is investing?

Investing, in its most basic terms, is putting money into  assets that will earn income or grow in value over time. It’s different to putting cash into a savings account, because it comes with risk – and you can lose your money.

If you’re a KiwiSaver member, you’re actually already investing. The voluntary savings scheme set up to help you financially for your retirement operates through investing. We break that all down in our story: A Young Person’s Guide to Investing in KiwiSaver.

Compare KiwiSaver providers for free with Canstar!


Isn’t investing hard, not to mention risky?

Thinking about investing can conjure images of people in suits yelling into phones about stocks going up and down. But investing is much more subtle than what we see in the movies. 

Yes, taking on risk can be intimidating, particularly in our current climate. But if you acknowledge the risk, and your regular cash flow leaves you with enough resources to set some aside each month, you can invest as a proactive approach to growing your wealth. Just remember that investing isn’t a sure-fire way of getting rich quick. And if you’ve already got debts, it’s a great idea to clear those first before you start on your investment journey. 

How and where to allocate your investment dollars is the question. There are a couple of ways to invest, and each promises a different rate of return paired with the degree of risk involved.

What can I invest in?


Savings accounts with your bank and term deposits are both cash investments. They’re one of the safest investments you can make, as your money just sits there and accrues interest over time.

Unlike regular bank accounts, term deposits are more strict in terms of allowing withdrawals. To earn the full interest rate, you have to agree to leave your money in the account for a fixed length of time.

Cash assets are typically the easiest investment option, because they allow you to keep your wealth liquid (easy to access). The biggest threat to your investment is if your bank fails due to financial trouble. Although, this is unlikely, especially if you invest with an established and reputable bank.

However, keep in mind the money you accrue from cash assets will be considerably less than a riskier option, especially at the moment, when interest rates are so low.


For many people, investing in property is an attractive option. It’s also one that’s easy to understand and isn’t cloaked in technical financial terms. Plus, you’re able to borrow money from a bank in the form of a mortgage to fund your investment, an option that’s not available if you’re buying stocks and shares.

You own a physical asset that you can see – bricks, mortar and land – and earn money either from the property increasing in value (aka capital gains) and/or rent paid by tenants.

In recent years, one of the main drawcards of property investment has been capital gains, due to the rise and rise of NZ house prices.

However, those returns are no longer a given. And without capital gains, returns on rental properties are far more modest. 


Investing in bonds means you lend money to a corporation or a government at a fixed rate of interest over a fixed term. You can either hold a bond until it pays out, or sell it early.

While the value of a bond will depend on how the market is performing, as investments they are relatively stable, compare to shares, and deliver reliable rates of returns.

Between government and corporate bonds, corporate have a higher risk profile, but can offer better returns on your investments. Government bonds are lower risk, but can have more limited rates of return.



Investing in shares means owning a piece of a business or corporation. They’re also known as stocks. When you choose shares, your returns can come in the form of capital gains, when the value of your shares increase. You can also earn a portion of the company’s profits, or dividends, which are typically distributed to shareholders monthly, quarterly or annually, depending on the company.

Investing in a business means you’re there for all the ups and downs of its financial journey, so be prepared for rises and dips. For this reason, it’s best to approach investing in shares as a long-term investment.

What about ETFs, what are they?

ETFs trade on the share market like shares, and are common on micro-investing apps like Sharesies. They’re a group of different assets, rather than one particular company, but they trade like shares on an exchange.

Think of it in terms of a bakery. Buying individual cupcakes is like buying shares. You pay the price for each different kind of cupcake. An ETF is like buying a box of cupcakes, you get all the different types, which can be grouped by a theme. Essentially they can allow you to invest in multiple companies, bonds or other investment types – all in one go.

How do I invest in these assets?

You can invest money directly through a bank (term deposits), an investment company (shares and bonds), or a real estate agent (property).

If you invest directly in shares, bonds or property, it’s a good idea to do your homework. Thoroughly research the company you’re buying into, or the real estate market in the neighbourhood you’re interested in.

Buying shares directly might not be the most accessible or safe option for young Kiwis investing for the first time. Micro-investing, however, is a good option as a start to understanding how investing works, without risking losing too much of your hard-earned cash. You don’t need much to start, you could put $50 into a site such as Hatch or Sharesies and go from there.

What are the options for getting advice?

If you’re serious about investing a decent sum of money, it pays to get some personalised advice. You can get investment advice from a range of people, including financial advisers, share brokers and banks.

Check that the adviser is authorised to provide advice. For investments like managed funds, shares or bonds, an authorised financial adviser (AFA) is best placed to help.

Advisers who work for a company that is a qualifying financial entity (QFE), like a bank, can also provide investment advice, but only on products provided by their QFE. These may include KiwiSaver, managed funds and savings accounts. Make sure you shop around.


I’m going to invest in shares, how do I know what companies to invest in?

Shares are often thought of as best suited to long-term investing, because while share prices do go up and down regularly, the historical trend has been upward.

Some traders will choose to actively monitor the market and trade often with the aim of a short-term gain. However, it’s important to remember that while shares may produce a profit, they could also return a loss. So, how do you choose what companies to invest in? To make things easier:

Start by looking at companies you know

If you’ve a general idea of what business they’re in and how they make money, you’ll have a better idea of what shares might be a good investment.

Make the most of online tools that provide access to company information, announcements, independent research and expert analysis.

Follow business news

Stay up-to-date with business news, it’s a good way to learn more about the companies and industries you’re interested in. You can also see what events are affecting them.

Look at how the company is performing as a business

Look at their published reports, such as annual reports, and their profit and loss statement. If you can understand these documents, you can recognise how the company is performing and the outlook for its future performance.

Keep track of how a company’s shares are performing

Create a watchlist of companies you’re interested in and monitor how they’re tracking. Start thinking about what price you’d be willing to invest at. 

Make sure you diversify

It’s sensible to not put all your eggs in one basket. Within shares, you can diversify between different industries, countries and companies. This gives you even more ways to manage your risk within your investment strategy.

This applies in any form of investing, not just in shares. Distribute money around different options and different companies.

For example, if you’re considering high-risk investments, you can balance the risk with other investments in lower risk areas, like cash and bonds.

If you want to invest for your long-term financial gain, but don’t know where to start, begin by looking into your KiwiSaver and making active decisions about your existing investments. Do you know what funds you’re invested in, or the fees your paying? Because you could be getting better returns.

In addition to many informative KiwiSaver articles, Canstar also has a free KiwiSaver tool, which allows you to compare different schemes and providers to find ones that fit your investment profile. Just click on the button below.

Compare KiwiSaver providers for free with Canstar!

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