Investing basics

Top tips to keep in mind when you're starting out with investing or looking into a new type of investment.

1. Look out for misleading advertising

   It’s prohibited for companies making investment offers to mislead or deceive you.

   You are entitled to accurate information when companies advertise – and they can’t withhold important information about the investment. Look out for things like advertisements promoting high returns with little explanation of the risks. Read more about misleading advertising and how to protect yourself.

2. Use a licensed provider

   Whether you are investing by yourself on an online investment platform or using a financial advisor - make sure that you're dealing with a licensed provider. Being licensed means they are authorised by the FMA and are adhering to a specific code like treating clients fairly and with integrity. See more about getting financial advice.

3. Check our scam warnings and alerts

   The FMA regularly publishes investor warnings, with the names of investment companies and websites you should be wary of. It doesn’t contain all potential problem investments - just the ones we have been made aware of. See the list of warnings and alerts. 

   The FMA also publishes the names of unregistered businesses that have been reported as offering financial services to New Zealanders. Investing with them means you have little protection in the event something goes wrong. See the list of unregistered businesses.

4. Do your research:

   Research a product well before investing (aka. do your homework). There are many types of investments available. Here are some key things to remember when doing your research:

   Think about the impact of fees before choosing an investment. If you can't work out how fees are charged, ask them plenty of questions and don't hand over money until you're satisfied.

   Don't go chasing high returns - past performance is not an indicator of future performance. Investments go up and down in value. 

   Understand your appetite for risk, and how much you can afford to lose if things go wrong.

5. Plan ahead

   Plan and invest based on your future needs and goals. If your goal is shorter-term, you might want to think about lower-risk investments with lower volatility. For help setting your investment goals and more information on the basics, please visit the Sorted website.

6. Understand market volatility

   If markets go down, stay calm. Share markets rise and fall, which is a normal part of investing.  History shows us that markets can and do come back – but it might take time.   

   If you’ve planned well and you’re keeping an eye on your individual investments you should still be on track to meet your goals in the longer term.

   It is normal to be nervous if a market downturn affects your investment balance – in fact, human brains are hard-wired to fear losses. Talking to a financial adviser or your product provider might help you avoid making a decision that will crystallise (lock-in) a loss.

7. Read our introductory guide to investing

   A quick guide for anyone who’s thinking about or already dabbling in investing – and wants to know more, written by Mary Holm, an award-winning financial columnist and author. Mary sets the record straight on eight common myths about investing. View Mary Holm’s introductory guide to investing.