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The simple truth about investing with Managed Funds

March 30, 2021

Stocks. Shares. Options. Derivatives… if you think investing is complicated then you’re not alone! If you’ve watched movies like “The Big Short” you’d be excused for thinking that you need a Master’s degree to understand it all.

woman doing yoga pose in lounge

The truth is the fundamentals haven’t really changed. It’s a bit like cars. Pop the bonnet on your Mum’s Morris Minor and it won’t look much like the engine bay on a Tesla. But the principles are the same. You still want to get where you’re going, and you still want to arrive in one piece.

For investors, the key principles haven’t changed in a century: risk and return.

Return is how much you want your money to earn for you.

Risk is a measure of how prepared you are to live with losses, especially in the short term.

At one end of the scale, a term deposit in a bank is pretty low risk – but comes with even lower returns (especially now!).

At the risky end, picking individual shares in companies you think will grow quickly can sometimes lead to high returns… but you could just as easily lose the lot.

Keeping it simple with managed funds

One of the reasons managed funds exist is to make investment decisions simpler. Rather than spending time researching companies and choosing where every dollar goes, you simply decide what balance of risk and potential return is right for you (this could change over time, so it’s important to review your fund choice now and then).

At Kiwi Wealth, we’ve made the choices straightforward:

  • A Conservative Fund, invested up to 20% in shares and other growth investments, with the remainder invested in cash and fixed interest investments.
  • A Growth Fund, invested up to 100% in shares and other growth assets, with the remainder invested in cash and fixed interest investments.
  • A Balanced Fund, sits in between the above two with up to 70% invested in shares and other growth investments, with the remainder in cash and fixed interest investments.

While we’ve kept the choices simple, there’s a lot going on under the bonnet. The whole point of managed funds is to have your investment professionally managed by a team of experts who make the tough investment decisions, so you don’t have to. Whichever fund you’re invested in, our investment team actively manage each fund to meet its investment objectives.

You’ll have access online to view how your investment is performing and receive regular updates from Kiwi Wealth each month.

Want to learn more?

Sound simple? We hope so! Learn more about investing in Kiwi Wealth Managed Funds and how you can dip your toe in the water from $100 or subscribe to our five part email series where we bust some of the myths around investing.

Tags: Investment Basics, Managed Funds

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