How to invest money if you've given up on home ownership
With house prices steadily on the rise, the dream of owning a home is becoming more unattainable for many Kiwis.
In recent years home ownership numbers in New Zealand have fallen as low as levels seen in the early 1950s.
But owning a home is not the be-all and end-all for a healthy retirement, as economist Shamubeel Eaqub and wealth adviser Glenn Read explain.
They've broken down the pros and cons of different investment strategies - if you've given up on a white picket fence.
Buy shares in companies
A shareholder has a claim to a part of a corporation's assets and earnings. In other words, a shareholder owns part of a company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares.
It's a popular investment strategy, but don't walk in blind, economist Shamubeel Equab says.
"Investing in the stock market when you don't understand it is a mistake I see too often.
"Most of us aren't experts in companies so leave that to someone else."
Mr Read says not to put all your eggs in one basket, and invest in "a highly diversified portfolio of quality bonds, listed properties and company shares on a regular basis".
There are companies set up to help you divvy up your money between stable companies, with a percentage of the return in exchange.
Invest in Bitcoin
Bitcoin is an online currency with which people can make one-to-one transactions and buy goods without involving banks, credit card issuers or other third parties. Bitcoins are basically lines of computer code that are digitally signed each time they travel from one owner to the next.
But Mr Equab warns this comes with high risk.
"I don't like it," Mr Equab says. "New investments can be volatile or risky. If you're starting with a small amount of savings that could make you lose everything."
Mr Read agrees, calling Bitocin "highly speculative and volatile".
"It's similar to investing in gold, agricultural products, fine art or oil. Like all new ideas, it may or may not do well."
Mr Read says the only place for an unstable investment is if it only forms a small part of an investor's overall strategy.
Equity crowdfunding is a mechanism that enables groups of investors to fund startup businesses in return for equity. It's a relatively new and growing opportunity that Mr Read says may be worthwhile, but warns the risk of capital losses is high.
"[You may] gain part ownership of direct growth companies that would not otherwise be possible... [with] low minimum investment required."
Although there's potential for high rewards, Mr Read says it's risky, so it's important to get independent financial advice first.
Kiwisaver is a voluntary, work-based savings initiative where you'll contribute automatically from your pay. You may also receive contributions from your employer and the Government. If you're self-employed, you can agree your contribution level with your provider.
"Absolutely be in Kiwisaver", Mr Eaqub says, "and make sure you're getting maximum benefit in terms of entitlement."
Mr Read says it could also help curb "spontaneous regretful spending".
However, it's important to note capital is locked in unless you are buying your first home, moving overseas permanently, find yourself in significant financial hardship or become seriously ill.
Invest in yourself
Mr Eaqub suggests developing a marketable skill by investing money in an education. But he warns some educations don't pay off, and on average, doesn't bring a big return.
"Not every bit of training is going to help but that's because people go through low quality degrees."
Mr Eaqub advises speaking to experts in the industry to get a realistic answer before embarking in tertiary study.
"Make sure whatever skills you acquire are going to bring a big income."
Student loans through StudyLink often add up to tens of thousands of dollars, and can take years to pay off.
Start a business
Mr Read suggests buying or setting up a business, but says you'll need lots of hard work and professional advice along the way. "It has high potential rewards especially if you have a unique idea," he says. "You can eventually earn a very high cash flow."
Mr Read says it's relatively easy to do in New Zealand compared to other countries, and even easier with the new online platform, where "anything is possible".
But high rewards come with high risks. Mr Read warns "most businesses fail within the first few years."
Mr Eaqub says if you're not going to have access to a mortgage when you're older, "don't play games with your money."
"Have discipline. Before you can start worrying about what to do with your money, you need to earn some"