Investing essentials

Investing: Using the money you have to try and make more money.

How you go about it depends on what you plan to achieve and by when. This section explains some key investing essentials, so you can make the right decisions for you when investing in the Westpac KiwiSaver Scheme.

Risk and return

Understanding risk

Investments are designed to grow, but they can also go down in value. The likelihood of your investment losing value or having lower than expected returns is known as investment risk. No investment is entirely risk-free, but the level of risk can vary greatly.

Understanding return

While investments are designed to grow, they can also go down in value. Some are likely to fluctuate more widely, and more often, than others. So it’s important to know your investment timeframe before you choose investments. Most significantly, investments with the most potential to grow are better as longer-term investments, because the value will usually go up and down more often in the short term.

Understanding your risk profile

Your attitude to investment risk will depend on a number of things. It’s partly about your personal attitude to risk, but you should also consider your investment goals and timeframe. Find out your risk profile and which Westpac KiwiSaver Scheme funds suit this, with our quick Risk Profiler.  

Taking these differences into consideration is what investors call the balance between risk and return. 

Types of investments

There are four traditional types of investment that offer different levels of risk and return: cash, fixed interest, property and shares. Most investors develop a strategy that includes more than one investment type.

Different investment types

All investments are designed to grow, but they can also go down in value. Generally, those investments with the highest potential to grow are also more likely to go up and down along the way. That’s why investors talk about finding a balance between risk and return.

Income assets, such as cash and fixed interest usually offer a steadier more reliable return. Whereas growth assets, such as property and shares have more potential to grow over time, but are more likely to go up or down in value in the short term.

The graph below shows how different investments have different risk and potential return profiles.

The graph is intended solely to illustrate this concept. It is not a prediction of future returns from, or the investment performance of, any Westpac investment option.


This is the old story about eggs and baskets. If you invest all of your money into one thing you may do extremely well. But you’re also exposed to the risk of that investment performing poorly, which would affect your entire investment.

That’s why experienced investors build a diversified portfolio. Because investments move up and down in value at different times and in different cycles, investment across different types of asset classes can help smooth out performance.

The majority of the Westpac KiwiSaver Scheme funds invest in a range of assets.

For advice, please contact our KiwiSaver specialists on 0508 972 254.

The importance of time

Time can help manage your risk

Time is an important factor in any investment. Since investments can go up and down, a longer investment time frame may mean that short-term dips have the chance to smooth out in the long run.

KiwiSaver is a savings initiative to help you save up for retirement. Investments made over the long term are more likely to increase in value over this time.

Long term vs short term

This is about how long you plan to invest before you need to use your money. When you’re planning for retirement, you may have a longer investment timeframe. If you’re nearing retirement, you might have a short- to medium-term time frame. If you’re looking to withdraw most of your KiwiSaver funds to buy your first home, this could be a shorter investment time frame. 

Also, longer timeframes mean you can make the most of compounding returns to help grow your money.

Setting goals

You wouldn’t set out on a journey if you didn’t know where you were going. It’s the same with investments. Spend some time thinking about your goals and tailor your investment strategy to suit.