Question:

We are a couple in our mid-30s and are contemplating investing our tax cuts - about $140 per month - in a growth asset such as shares.

In our early 20s we had our confidence knocked by managed funds (allocated to shares) that endured three years of minus 30 per cent returns. We know we're young and shouldn't be so nana-ish, but ever since then we've invested in cash or very conservative investments.

Can you please recommend a way for us to ease into a more growth-orientated asset allocation?

Answer:

Mary Holm: Investing your tax cuts is a great idea, for two reasons. The first is that it's money you didn't have before, so if it's a bit of a rocky road, maybe you can tell yourselves in the downtimes that it was "easy come, easy go".

Secondly, if you invest $140 a month you will be drip-feeding it. That works well at any time, but particularly now when the markets are so iffy. It means you'll make at least some purchases at the bottom of the market.

If investing a fairly small amount gradually doesn't give you enough "easing", you could also invest in a fund that holds property and bonds as well as shares. Over the long term its average return probably won't be as high as in a purely share fund. But the road will be easier, and it will certainly be more adventurous than what you are in now.

When choosing a fund, look for one that charges low fees. That can make a big difference over the years.

By the way, if you are not in KiwiSaver, it would be much better to save via that scheme.

If one of you - or the two of you together - happen to earn around $84,000 a year, your 2 per cent contribution to KiwiSaver would come to about $140 a month. Even if you earn somewhat more or less than that, 2 per cent of it won't be all that different from $140.

If you do your saving through KiwiSaver you'll get government and employer inputs too, which make a huge difference to your total savings.

One more thing: as you venture back into risky investments, promise yourselves you won't take fright and move your money out of them when the going gets tough. That's how people lose lots.

Mary Holm is the author of bestselling books on KiwiSaver and personal finance. She is also a highly praised seminar presenter. Her written advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following that advice.