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The Journey to a Successful, Diversified Portfolio

The Journey to a Successful, Diversified Portfolio

Understanding your appetite for risk is an investment fundamental, but aligning it with your investor profile and stage in life is key to getting the most from a diversified KiwiSaver strategy, writes Sam Bryden.

2 July 2024

As KiwiSaver investors, we generally get the opportunity to select from variations of conservative, balanced or growth options. These risk settings shouldn’t necessarily reflect our own tolerance for fear or danger, rather they should align with where we are in our KiwiSaver journey.

For instance, whether you’re a legal exec or a lion tamer, if you’re in the early or middle stage of your career with decades of gainful employment ahead of you (good luck if you’re the lion tamer), then there’s a strong argument for you to be more inclined towards growth funds.

This is because history shows us that while they are subject to greater volatility, equities will typically outperform the likes of bonds and cash over time and therefore give you the greatest opportunity to accelerate the growth of your retirement wealth.

However, as you get closer to a life milestone, like your retirement or first-home purchase, you may be more inclined to change your settings to reduce risk and protect what you have saved.

Your personal investor profile is defined by more than just your comfort with volatility at varying life stages. It reflects a range of factors, including your personal beliefs, preferences, knowledge, and the time, skills and resources you might have to devote to researching and monitoring performance.

Aligning your risk appetite with your personal investor profile may lead you to specific fund managers whose investment philosophy you share, whose vision you align with, or whose performance history gives you greatest confidence. It will also likely lead you to more than one type of fund.

We’ve introduced the GoalsGetter KiwiSaver Scheme to support your ability to make good, informed choices from a curated mix of funds from New Zealand’s leading fund managers; diversifying risk and, with the help of either your financial adviser or our inbuilt robo-advice, connecting you with expert strategies tailored to your KiwiSaver ambition.

To the left you’ll find the funds we have handpicked to enable you to create a multi-manager, multi-fund portfolio tailored to your unique personality and circumstance. For more information on how to find your ideal combination, hop on to Goalsgetter.co.nz or chat to your financial adviser.

Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.