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Step 1:
Define your goals

Every smart investment starts with a clear goal. Whether you’re growing wealth, generating income or protecting your savings, your purpose should shape your plan.

Step 1: Define your goals

Why are you investing?

You’re here

Step 2: Understand your constraints

Time, risk and personal preferences

Step 3: Build your portfolio

The building blocks of a portfolio

Goal selection

For investors focused on building wealth over years or decades.

Long-term growth · 7+ years

Examples

Saving for retirement

Building a nest egg for financial independence

Key attributes

Time horizon: 7+ years

Risk level: High (volatility is normal)

Best for: Investors who won’t need the money soon and can ride out market ups and downs.

Common investments

Shares: Funds or ETFs that only invest in the shares of individual companies (e.g. S&P 500 index funds).

Growth funds: Diversified funds with a large proportion of growth assets such as shares and property.

Alternative assets: Such as cryptocurrency or infrastructure assets.

Key investing principle: Invest now

The best time to start investing is right away. Compound returns pile up over time, so the sooner the better.

“Time in the market beats timing the market.” Compound interest works best over long periods, so start early.

For investors who want steady returns or are looking to fund an upcoming milestone.

Medium-term stability · 3–7 years

Examples

Earning passive income

Saving to fund a child’s education

Key attributes

Time horizon: 3–7 years

Risk level: Low to moderate (some fluctuations, but less than shares)

Best for: Investors who need reliable returns but can’t afford high risk.

Common investments

Bonds: Funds that invest solely in government or corporate bonds, with lower risk and more stability than shares.

Dividend funds: Funds that invest in companies that pay regular dividends (e.g. utilities, blue chips).

Balanced funds: Diversified funds with a good mix of shares and bonds (e.g. 60/40 portfolios).

Key investing principle: Diversification is essential

Diversification smooths portfolio performance over time while helping protect investors against catastrophic losses.

“Diversify to reduce risk.” Split your money between income-generating assets and safer options.

For investors who want to preserve capital while earning some return.

Short-term safety · 0–3 years

Examples

Building a rainy day fund

Preserving funds needed for a house deposit

Key attributes

Time horizon: 0–3 years

Risk level: Very low (minimal fluctuations)

Best for: Investors who need quick access to cash or can’t afford losses.

Common investments

High-interest savings accounts: Liquid and low-risk.

Cash and money market funds: Short-term, stable returns.

Short-term term deposits: Lock in a rate for a few months to a year.

Key investing principle: Understand the risks

Learn before leaping. Understand the relationship between risk and return over time.

“Safety first!” Prioritising liquidity and capital preservation will likely mean minimal exposure to assets like shares and bonds that can fluctuate significantly in value.

Helpful tips for setting your investing goals

Your goals shape your strategy

A retirement portfolio looks very different from a house deposit fund. Always align your investments with your overarching financial goals.

Example: If you need the money in 2 years, shares are risky. If you’re investing for 20+ years, they’re much better suited.

Mix and match goals

Most people have multiple goals (e.g. retirement and an emergency fund). It’s common to have dedicated investment portfolios and strategies for each distinct goal, so split your money accordingly.

Example: Many investors already do this, with a KiwiSaver portfolio for retirement and a separate investment portfolio for liquidity and shorter-term goals.

Revisit your goals annually

Life changes, so should your investments. A new job, a baby or another change in your personal circumstances may mean adjusting your financial goals.

Example: It’s common to revisit your goals after buying a first home, as you no longer need to invest conservatively to preserve your deposit and can start investing more long-term.

Ready for the next step?

Now that you’ve set your goals, let’s talk about the other half of the equation: your investing constraints.

Grandparents holding their two granddaughters

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