Working out your risk profile
Investing money has its risks if you are prepared to go for growth but even though you may not have the stomach to take on risky investments
The main one is to diversify. That is to spread your portfolio over a wide range of industries. This is possible for the ordinary man and woman in the street who are able to invest in managed funds where your investment is combined with those of others. It is then up to the fund manager to handle all of the investments. This is exactly how kiwisaver operates.
Each fund will give you an option of investing in Conservative, Balanced, or GRowth funds and your decision of which fund to leave your money in will be determined on whether you can stomach heavy losses should the sharemarket go bellyup. If the though of losing your money will cause you sleepless nights then you should go for balanced funds. Conservative funds will not grow your money if at all once the fund manager withdraws their fees that you may have better options though in the case of kiwisaver, the government will contribute 50% of what you put in to a maximum of $520 per annum so at least this would make it worthwhile.
Your risk profile is not the only determining factor in deciding which fund to choose. If you are saving for a deposit on a home then you are not going to want to risk losing your money in the sharemarket which will happen if you had all of youer money in Growth funds only for the markets to tumble.
Your age is another factor to consider. When you are young, it is advisable to go for growth funds because you have more time to recover should the markets go down whereas someone nearing retirement would have their retirement plans affected should this occur.
It is your money however and your own responsibility to decide where you are going to invest so learn all you can about the various types of investments and in time you increase your financial literacy.
The information given here is my own opinion and not given as financial advice.It is best to seek professional financial advice if you are unsure.
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