Property vs Managed Funds – What’s our next step?
Property has long been part of the Kiwi dream. Many New Zealanders have built wealth through residential or commercial property — and for some, it’s still the right move.
But the investment environment has changed. High prices, tighter rules, and reduced tax benefits mean property isn’t always the automatic choice it once was. Managed funds are now a strong alternative — offering flexibility, diversification, and a far lower stress load.
The Stress Factor
Owning property can be rewarding — but it can also be demanding:
Tenant management: Missed rent, damage, or disputes.
Maintenance: Leaks, repairs, and compliance with Healthy Homes standards.
Vacancies: Periods with no rental income (vacancies).
Regulation: Changes in tenancy law or tax rules impacting returns.
Market volatility: When it comes time to sell, markets aren’t where you need them to be.
Debt: often owning a property means also having higher debt levels, which doesn’t appeal to everyone.
We often compare owning property to running a small business – it needs to be run and managed like one, and is not a passive investment.
Managed funds, by contrast, require virtually no day-to-day involvement.
Your investment is managed by professionals, diversified across multiple markets, and doesn’t involve late-night plumbing emergencies. For many of our clients, this lower stress level is reason enough to prefer managed funds — especially as they approach retirement.
Age & Life Stage
Younger Investors (20s–40s)
If you have strong income and time on your side, property can be a useful wealth-building tool as part of your overall asset base— particularly if you’re comfortable with leverage, the responsibilities of being a landlord, and the increased risks.
Managed funds still make sense alongside property to spread risk and build liquid reserves.
Mid-Life Investors (40s–50s)
This is often a period of peak earnings but also peak expenses. Overextending into a larger or multiple property investments can add stress, reduce flexibility, and increase exposure to interest rate movements.
Many in this stage benefit from balancing debt repayment with building a diversified managed fund portfolio.
Approaching Retirement (55+)
Large property debt close to retirement can be risky. If property values fall or rental income drops, it can disrupt retirement plans.
At this stage, liquidity, diversification, and capital preservation generally become more important — making managed funds a strong fit.
Many clients choose to sell an investment property and place the proceeds into managed funds, generating a steady, lower-maintenance income stream.
In Summary
Property still has its place, we are not arguing against that — but it’s no longer the only way to build wealth in New Zealand. The right investment mix depends on your stage of life, your financial goals, and your tolerance for stress and complexity.
For many Kiwis, especially those planning, approaching or already in retirement, managed funds offer:
Lower stress and no tenant headaches
Greater flexibility and liquidity
A professionally managed, diversified approach to protecting and growing wealth.
We can help you decide whether property, managed funds, or a blend is best for your personal situation — and ensure your investments work for you at every stage of life.
Want to talk more? Call us today.
Legaseed NZ Ltd (FSP1005404) holds a licence issued by the Financial Markets Authority and provides financial advice in relation to financial & retirement planning, investments, KiwiSaver and personal risk insurance. Our disclosure information can be found on our website www.legaseed.co.nz, or is available on request and free of charge.
