Tamsyn Parker

Money Editor for NZ Herald

Investment: Risk a key decision for investors

Photo / Getty Images
Photo / Getty Images

With any investment comes risk and that is something New Zealanders have not traditionally been great at assessing.

Pushpa Wood, director of Massey University's New Zealand Centre for Personal Finance Education said investors needed to consider what sort of risk they are prepared to take in order to decide where to put their money.

Wood said investors needed to consider how much money they could afford to lose, whether their investment was going to be short or long-term and whether they needed access to the money.

"That will determine what your plan is," she said.

Assessing risk also takes into account volatility. Shares are at the upper end of the risk spectrum because they can be very volatile.

That contrasts with term deposits where the rate of return is fixed for a certain time frame and investors can be fairly confident of getting their capital back.

Wood said in general a higher level of risk also meant a higher level of return.

"If you want your funds to grow by 15 per cent then you need to be prepared to take the risks that come with that."

- NZ Herald

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