New Zealanders’ Biggest Investment Mistakes


OPINION: I came across a discussion board asking New Zealanders to list their investing mistakes, and I was pleasantly surprised to see the honesty shown.

With so many ways to lose money investing, a comprehensive list could help avert disaster.

I have spent too much time at different stages of my life thinking too much about investment options. In saying this, I also rushed into unproven investments and panicked when the share price of a newly listed IPO fell, even though the company had a solid foundation.

Mistakes are all around us – my list below describes what you need to know.

* It’s time to stop accepting zero returns on savings accounts
* Fresh KiwiSaver – the myths, the truth and your reality
* How not to invest: The seven traps to avoid

Error 1 – Going all-in on a single action

Each generation has its “pumpkin patch”. In the 1980s, Chase Corporation saw its stock price drop from $ 10 to $ 0 after the crash of 1987. Chase is not a name forgotten by many adults now (or nearing) retirement.

More recently, companies that have caused a stir have included CBL Insurance and Pumpkin Patch. And who can forget Snakk Media? A company that continued to report “news” but ended up going bankrupt almost as soon as it entered the NZAX.

With so many ways to lose money investing, a comprehensive list could help avert disaster.

With so many ways to lose money investing, a comprehensive list could help avert disaster.

The problem with “all in” is that you have 0% diversification. For every Mainfreight and Xero, there are dozens of Snakks and CBLs.

The drop in A2 Milk should be a reminder that even good products can go wrong.

Mistake 2 – Starting a business that thirsts for upfront costs and ongoing overheads

Too many New Zealanders, convinced of an idea, commit too much to the initial costs. Long before Covid-19, cities across the country had stores with “rental” notices.

The facts are grim and most new businesses do not survive. Lack of money is the main reason. New Zealand has many regulatory costs that eat into the margins; this fact of life is a nasty surprise to anyone who leaves a salaried job to start their own business.

I love seeing businesses that start small and build a following, like a food truck to move into a restaurant or an online store to sample selling in a retail store. This is a much more stable way to develop an idea – by testing demand first, tweaking the product, and getting sustained sales.

I did this with MoneyHub – we wrote about 30 guides and waited to see the interest; we quickly learned what was useful (and what was not) to New Zealanders. It allowed us to learn as we went.

Mistake 3 – Dating someone who has conflicting spending habits

Love and money can work in harmony or blend together like seals and oil spills, and the results are messy. As noted in our guide to investing mistakes, the reality is simple: If you are a saver and start a relationship with a spender, it will be a source of conflict. As a result, there will be shortfalls, and your money (and assets) will be accessed and used for things that you probably don’t appreciate or don’t benefit from.

You can have two approaches, do nothing or do something. There are risks associated with doing nothing – if you find yourself unable to afford what your friends and family are doing because there is “no money” you are almost certain to hold a grudge. There will also be disputes over money.

On the flip side, doing something means you’ll have a conversation and be on the same page, although there will be a few grunts and challenges at first.

You don't want to be in your sixties and owe people money, says Chrisopher Walsh.


You don’t want to be in your sixties and owe people money, says Chrisopher Walsh.

But keep in mind that people change. A quick spender in their 20s can be a savvy business owner by the time they turn 30. Sometimes “learning” the hard way shapes better behavior.

However, if you are sharing the stress of personal debt without reaping any benefits, a friendly conversation is a good place to start before things get worse.

Mistake 4 – Not repaying your debts

Debt is expensive, and if you reach retirement with a mortgage and / or other loans owed, you will be at the mercy of lenders without the choice of alternatives you might be used to.

Heartland Bank’s annual results point to the rise in reverse mortgages, but there are more affordable ways to fund retirement beyond accumulating debt.

Rather than replacing a perfect car, buying a bunch of new white items for a working kitchen, or getting a “gold” credit card with “perks”, think about how happy they will bring you. Paying off debt has never made anyone miserable.

You don’t want to be in your sixties and owe people money. It just restrains you and limits your choices.

My point is simple – throw away the credit cards, go for a long time for a used Japanese car, and don’t seek happiness in unnecessary retail purchases, it will always be fleeting.

Instead, pour that money into your mortgage and personal debt to prepare for years of freedom, not debt service.

Christopher Walsh is the founder of the financial resources site

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