Local Recovery Solidifies, While Global Uncertainty Continues

Investment risk is unavoidable – so it’s up to each one of us to choose how much risk we will accept. What will you do in 2022: avoid risk or embrace it? Or should you just sit on your hands and wait to see what happens?

There’s no such thing as a zero-risk investment

When you try to think of a completely risk-free investment, you soon realise it’s an oxymoron.

The investment most commonly described as ‘no risk’ is paying off your mortgage. It is an extremely safe option for your money, but it’s not free from risk. It simply moves the risk into the future. If you retire with a mortgage-free home, but no other investments, will that be enough to live on? What if you don’t want to downsize? What if you’re only paying 4% interest on your home loan and you can earn 8% investing in something else?

Paying your loan off isn’t risk free. It simply means you’re choosing a low risk of losing your capital and accepting a higher risk of missing out on opportunities for growth.

Doing nothing vs doing something with a little risk

All investments come with some risk and risk is scary.

That’s why the most common investment mistake is doing nothing. Doing nothing is how a whole lot of Kiwis invest, even some pretty smart ones. For example, all those people who think about doubling their KiwiSaver contributions to 6% every year, but never get around to it. Or people who’ve been talking about buying a rental for the past five years but done nothing. Or those investors who are ‘waiting for the bubble to burst before I make my move’.

Doing nothing feels risk free. But of course that’s not the case. Doing nothing has a huge opportunity cost because you miss out on the rewards of compounding interest. Doing nothing is worse than investing in something with a little risk.

What’s your risk tolerance?

Some people want their investing to be exciting; for them, volatility is all part of the fun. For others, the same amount of risk would mean lying awake at night, dreaming up worst-case scenarios. You need to understand how much risk you can live with: how much leverage, how many ups and downs, and how much you can afford to lose. And you need to keep assessing it – the amount of risk you can tolerate changes throughout your life, depending on factors like who’s dependent on you and the reliability of your income.

There are some tools available for assessing your risk tolerance that can be helpful, like Sorted’s excellent Investor Kickstarter which gives you an investor type and shows you a mix of investments that might suit you. Or take the professional approach by talking to a financial advisor, such as RIVAL Wealth.

Once you know what your risk tolerance is, it’s easier to say no to investments that don’t fit your profile. Even when everyone else is on social media bragging about their gains in crypto, you can feel comfortable that it’s too risky for you. Or when commentators are all predicting a house market crash, you know that’s just part of the volatility of your investment and the returns are worth the bumps along the way.

We like secured loans backed by property – it fits our risk profile

Here at Zagga, we like the fact that our investments are secured by properties, because it means there’s a tangible asset in our control if something goes wrong. We don’t facilitate unsecured loans – that’s for other peer-to-peer lenders. And we do as much research as we reasonably can so our investors can assess each offer to see whether it matches their risk profile. That level of risk lets us sleep soundly at night. If your investments aren’t doing the same for you, now is the perfect time to review your portfolio.

The latest GPD data is out, and at 0.2% growth in the last three months of 2025, it’s risen for three out of the past four quarters. We’re into annual growth for the first time since the third quarter of 2024, which is a hopeful signal that local conditions are improving.

The latest data shows solid increases in retail and accommodation sectors, finance and insurance, media and comms, and arts and recreation. Construction under performed, but data from January and February 2026 looks more positive for the sector, so overall the picture here in New Zealand is encouraging.

The looming concern is the global oil crisis, and the headlines seem alarming. But we’ve been reading some pretty frightening headlines every week since 2020, and we all just keep on going. What can you do in these uncertain times? The best advice is not to panic. If you have an investment strategy that’s taking you toward your financial goals, stay calm and talk to your adviser before you make any sudden moves. As ASB’s analysts point out, “the average conflict results in a very short-term drawdown of roughly 5% (using the S&P500 as a proxy), with the market recovering its losses over an average of 47 days.”

In the longer term, this fuel crisis might have an upside. If it encourages a faster shift to renewables, that will improve New Zealand’s energy security and make us less vulnerable to these oil shocks in future. ANZ is reporting more interest in EVs, and BYD says it’s had a bumper few weeks. The national grid reached a record high of 96.4% renewable in the latest data, a new record, so the decarbonisation megatrend is continuing its onward march here in New Zealand.

In response to the picture both here and abroad, the big banks have been nudging up their interest rates, leading to higher returns for savers. Term deposit rates are up marginally, but still below 4%. Returns on Zagga loans have also stayed steady, and have been consistently paying around 7%. We’re seeing rapid uptake on new opportunities, and we expect this continue throughout 2026 – particularly as momentum grows in the construction sector.

We’ve seen a noticeable increase in both the volume and quality of loan investments coming through this month, and we’re excited to be bringing these new opportunities to our investors. With strong demand and quick uptake on new listings, it’s important to be prepared so you can take advantage of opportunities as they become available.