In our latest Inside a Financial Plan episode, we explored one of New Zealand’s biggest investment questions - shares vs property. As Dion and Rachel reviewed their financial plan, James guided them through the trade-offs between these two wealth-building strategies - looking at growth potential, flexibility, and how each fits within their long-term lifestyle goals.
Weighing the Plan: Build or Spend?
By retirement, Dion and Rachel’s projections show more than $6 million in assets – excluding their family home. Naturally, they asked the question many people do: If we’ll have that much later, why not spend more now?
James reminded them that projections are based on assumptions, not reality. The couple’s focus should first be on building momentum – clearing their mortgage and strengthening their foundation – before lifting spending. Once they’re mortgage-free, they can confidently increase travel, family, and lifestyle expenses without compromising their future goals.
Investing in Shares vs Property
When it came to future investments, the couple were divided. Dion saw opportunity in buying another property, while Rachel preferred the simplicity of shares or managed funds.
James broke down the comparison:
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Property Investment:
Property remains efficient when it comes to return on capital. Using leverage, investors can control a large asset with less initial capital. For example, a $700,000 property growing 5% annually creates around $35,000 in capital gains. Even if the property requires an $8,000 annual top-up, that’s still a 3–4x return on invested funds.
However, James was quick to highlight that property is not passive income. Even with a good property manager, there’s still admin, maintenance, and the chance of difficult tenants. Property can be powerful – but it also demands time and tolerance for complexity.
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Shares and Managed Funds:
Shares offer a “set-and-forget” structure – ideal for those who prefer a lower-maintenance, more flexible option. Regular contributions can be automated, and returns compound quietly in the background.
As James explained, shares can achieve the same financial goals over time, just with a smoother process and less emotional involvement.
Ultimately, both strategies can work. The deciding factor is personal: whether you want the leverage and potential upside of property, or the simplicity and flexibility of shares.
Beyond the Numbers: Financial Independence and Family
Dion and Rachel also discussed how their investments could shape their daughter Lily’s future. They quickly realised that gifting property outright might remove important financial lessons. Instead, James suggested focusing on building flexibility into their plan – so they can choose to help her later without compromising their own independence.
Their long-term goal isn’t early retirement, but freedom. Dion hopes to reduce his working hours in his 40s and 50s – not to stop earning, but to gain time. As James put it, financial independence means options, not necessarily “quitting work.”
Key Takeaways
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Property offers leverage and strong capital growth but requires ongoing management.
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Shares provide a simpler, hands-off approach with long-term compounding returns.
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Projections are guides – focus on momentum before lifestyle upgrades.
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Financial independence means choice, not necessarily retirement.
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The best strategy depends on your tolerance for risk, admin, and complexity.
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You can reach your goals with either – the right mix is unique to your situation.
Next Steps:
If you’re deciding between investing in shares or property, or simply want clarity on what’s right for your goals, book a consultation with Lighthouse Financial to start building your plan today.
This series is proudly sponsored by PocketSmith, the smart budgeting software that helps you see your money clearly. With live bank feeds, automated categorisation, and powerful forecasting, PocketSmith gives you the full picture of where your money’s going – and where it could take you.
At Lighthouse Financial, we use PocketSmith with many of our clients because it connects your day-to-day spending to your long-term goals. Unlike a spreadsheet, it can’t be fudged – real data means real progress. Whether you’re managing a household budget or planning for financial freedom, PocketSmith helps turn your plan into action.
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If you’d like to learn more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
