The Best Investments for Under-65's

The top investments for under 65-year-olds

Unlocking the pathway to financial freedom isn't just about how much you invest, but where you invest. For those under 65, the landscape is rich with opportunities that cater to varying risk appetites, time horizons, and financial goals.

Whether you're gearing up for an early retirement, building a robust portfolio, or seeking smart ways to grow your wealth, discover the best investments tailored to maximize your returns and secure your financial future. Dive in and start navigating your way to financial success today.

Disclaimer: the first few aren’t financial investments, though they offer a low risk and guaranteed rate of return!

1. Abundance Mindset

Let’s forget traditional investments like stocks and bonds for a second.

Embracing an abundance mindset is pivotal for achieving financial success and making the most out of your investments. An abundance mindset shifts your focus from limitations and scarcity to opportunities and growth, allowing you to see the full potential of your financial journey. This positive outlook encourages proactive and long-term decision-making, fostering an open mind and willingness to accept appropriate risks.

By believing in the growth potential of your investments and the market, you remain open to new possibilities, such as emerging technologies, green investments, or global markets that might otherwise be overlooked.

Moreover, an abundance mindset cultivates resilience. Market fluctuations and economic downturns are viewed as temporary setbacks rather than insurmountable obstacles. This perspective empowers you to stay committed to your investment strategies, continuously seek knowledge, and adapt to changing financial landscapes.

Ultimately, adopting an abundance mindset can transform your financial outlook. It fosters confidence, encourages continuous learning, and propels you toward making informed and dynamic investment decisions, ensuring that your wealth continues to grow and thrive in the long run.

An abundance mindset doesn't just impact your investment approach, it spills over into your earning potential. Believing there's enough success to go around fuels your drive to develop your skills and pursue new opportunities. You're not afraid to negotiate raises or explore freelance gigs, confident that your value isn't diminished by someone else's success. This go-getter attitude can lead to promotions, higher paying jobs, and a stronger earning capacity, further amplifying your ability to invest and grow your wealth. It's a win-win cycle fuelled by the belief that abundance is yours to create.

2. Invest in Your Skillsets: The Most Valuable Investment

Your most powerful investment stares back at you in the mirror each day: it’s yourself.

By continuously honing your skills and knowledge, you create a future-proof asset that protects against inflation, technological disruption including artificial intelligence (AI), and an evolving job market.

Think of yourself as a human investment portfolio. Every course you take, certification you earn, or project you complete adds more value. This increases your demand, allowing you to command higher earning power (salaries, bonuses, commissions, or income you earn as someone who’s self-employed or a contractor) and navigate economic shifts with confidence.

Investing in your skillset isn't just about formal education. It's about staying curious, proactive, and embracing lifelong learning. Take online courses, attend workshops, or shadow someone more experienced. Every new skill or piece of knowledge strengthens potential to earn and value in the marketplace.

By continuously investing in yourself, you become the most valuable asset in your financial future.

3. Repay Any High-Interest Debt

Alright, let’s turn our attention to financial matters. Before we get to what might be strictly defined as investing, there’s a couple of other things to tend to.

High interest debt is the sort of debt found lingering on credit cards, hire purchase arrangements, personal loans, vehicle lending, peer to peer lending (often called P2P), or typically any lending which is for consumer goods. Not a mortgage loan for something like an investment property which is expected to increase in value over the long term. These sorts of consumer debts nearly always have high interest rates, outrageous administrative fees, and if you have them, they are probably a big drag on your future or current cashflow. Quite simply, it’s nearly impossible to move forwards if you’re paying large amounts of interest each month, so these so-called “bad debts” need to be immediately crushed. Common rates for these sorts of bad debts are:

• 150% - 300% pay-day loan
• 17% - 35% hire purchase
• 15% - 30% store cards
• 13% - 30% credit card
• 12% - 30% personal loan
• 10% - 25% P2P lending

By repaying debt, you’ll improve your regular cashflow, and therefore generate net income (this is your income after all expenses are deducted, such as debt repayments) which can be put to better use elsewhere. Repaying debt essentially achieves a low-risk rate of return (the rate of return is a performance measure used to evaluate the gain of an investment, usually in terms of a percentage per year based on the investments value), reduce risk, and increases your overall net worth.

Student loans are usually considered an exception to this: New Zealand student loans are interest-free so long as you stay in the country. Because of their interest-free nature, the steady rate of inflation means that in real terms the amount you owe is steadily reducing relative to the price of other goods and services. So, unless you meet several criteria such as planning to leave the country, buying your first home or property investment, there is usually no reason to pay a student loan off at anything other than the normal rate.

4. Repay Your Home Mortgage

For readers who are homeowners, reducing your mortgage is a sure-fire way to get ahead and will reduce what’s usually the biggest payment in your budget. The return offered by paying off your mortgage is tax-free and offers a guaranteed return. (If you don’t have your own home yet, saving for and getting your first home is likely to be your best bet).

Interest rates charged on mortgages are usually nowhere near as high as the high-interest debts listed earlier such as credit cards and hire purchase. Mortgage rates for the last few years in New Zealand have varied widely, anywhere between two and nine percent per year. Depending on your tax rate, for an investment to outperform the mid-point of this it would need to consistently generate about eight or nine per year before taxation is applied. Unless you’re a particularly aggressive investor, you’re unlikely to sustainably reach that hurdle consistently.

Learn more:

• ‍Existing homeowners: repay your home loan years faster‍
• First-home buyers: buy your first home

If you have a mortgage on an investment property or properties, that might usually be an exception: the low rental yield (income an investment property generates relative to its value) on nearly all New Zealand residential real estate means property investment is largely based on capital gains. Along with tax advantages, this means that it’s not usually required to repay mortgage debt on an investment property beyond the amount necessary to get the property to an approximate breakeven level – when the rent covers all expenses. If you’d like to discuss this in more detail, please let us know.  

5. Join a Good KiwiSaver Scheme and Get the Minimum Benefits

KiwiSaver is a voluntary, work-based savings scheme to help New Zealanders save for retirement. KiwiSaver has been designed to be hassle-free, so it’s easy to maintain a regular pattern of savings.

One of the main benefits of KiwiSaver is the government contribution of $521 per year, which is paid into your KiwiSaver account so long as you contribute over $1,042 and are over 18. If you’re employed and you’re a KiwiSaver member contributing at least three percent of your salary, your employer will also contribute three percent of your income. Therefore, if you earn $40,000 or more and are making three percent contributions, you should qualify for the annual government contribution.

However, there are several drawbacks of KiwiSaver:

• Not all KiwiSaver Schemes are equal, and fund choices within schemes differ markedly too. Pay careful attention to your choice of scheme and fund.
• Chief drawback is the strict withdrawal criteria that apply to KiwiSaver balances. This means you usually can’t withdraw funds until retirement or you’re buying a first home. This is where if you’d like the choice to retire before age 65, or if you’d just like access to your own money, non-KiwiSaver investments are far more likely to meet your needs.

Related material:

• Financial mistakes to avoid in your 20s and 30s
• Financial mistakes to avoid in your 40s, 50s, and 60s
• The biggest millennial money mistake

6. Develop a Large Portfolio of Investments to Achieve Your Financial Freedom

Once the investments above are mastered, it’s time to start taking serious action towards growing the funds you need to achieve your financial freedom – which likely includes growing your overall nest-egg to a sufficient size where you can choose whether or not you work anymore.

The best investment, or collection of investments (portfolio) at this point varies greatly from person to person, though as always, ensuring your overall investment portfolio is as diversified as possible is usually accepted as a prudent move to ensure risks are minimised and your overall financial position is as robust as possible.

The Bottom Line: The Best Investments for Under 65-Year-Olds

Level up your financial game! Forget limitations – the world of investing is your oyster (with way cooler pearls). Cultivate an abundance mindset and see opportunities bloom everywhere. Invest in the powerhouse that is you – hone your skills, pay off high interest debts, develop a large portfolio of assets, and watch your wealth flourish.

Remember, abundance is yours for the taking. Believe in it, invest in it, and watch your financial dreams become reality!

If you’d like to discuss anything mentioned here with one of our financial advisers, then reach out immediately to book your obligation-free initial consultation.