Where to invest $1 million in New Zealand, and the part secured income can play

Where to invest $1 million in NZ depends on three things: when you might need it, the income you want and the price swings you can accept. Many investors divide it by job: cash and Kiwi Bonds for access, shares and funds for growth, and a secured income slice, such as co-funded loans secured over property, spread across several borrowers.

This is how some investors approach a seven-figure sum, not advice on yours. It comes from HomeSec Business Finance, a private business lender lending since 2004, with its New Zealand office in Auckland. HomeSec funds most loans from its own balance sheet and offers selected ones to wholesale investors to co-fund.

What does $1 million earn in New Zealand at today’s rates?

Rates have turned. After falling from 5.50% in mid-2024 to a low of 2.25% in November 2025, the Official Cash Rate rose to 2.75% on 2 September 2026. The table shows a year’s interest on NZ$1 million across the usual income choices, as an illustration: simple interest, fully invested all year and repaid on time. The last column applies the 39% top rate.

The rows are not equivalent. A Kiwi Bond has the Government behind it and a deposit has scheme cover up to its limit. A co-funded loan has neither: it relies on a registered mortgage and the owner’s equity, and a sum this size would sit across several loans rather than one. Tax also changes the picture. A 4.05% deposit taxed at 39% keeps about 2.47%, below the 4.1% inflation the Reserve Bank reported for the June 2026 quarter.

Why does a seven-figure balance need a different approach?

The safety nets have ceilings. The Depositor Compensation Scheme covers up to $100,000 per depositor, per deposit taker, so covering $1 million in deposits would take ten institutions. Kiwi Bonds take $500,000 at most in any one issue.

Tax bites at the top rate. Individual income over $180,000 attracts a 39% RWT rate, and trustees pay 39% once a trust’s net income passes $10,000. Which entity holds each part of the money starts to matter.

A low rate becomes expensive. On $1 million, earning 4% rather than 12% costs $80,000 a year before tax.

Does $1 million qualify you as a wholesale investor in New Zealand?

Not by itself. Under the Financial Markets Conduct Act 2013, the tests lean on experience and activity rather than a wealth threshold. Most co-funders qualify as eligible investors. They certify in writing that their experience acquiring or disposing of financial products lets them assess the merits, their own information needs and the adequacy of the information, and a financial adviser, qualified statutory accountant or lawyer confirms the certificate in writing. Certificates last two years.

Other routes include the investment activity test, such as having held a portfolio of specified financial products worth $1 million or more in the past two years, and the large test of net assets or turnover above $5 million at the end of each of the last two financial years.

The process protects investors as well as offerors. In October 2022 the FMA warned seven wholesale property investment firms, Du Val entities among them, over certificates whose stated grounds were owning KiwiSaver, holding term deposits or owning rental property. A 2025 High Court ruling has since clarified what a valid certificate needs. Our wholesale investors page takes each route in turn.

How might $1 million be divided?

Most people with this much don’t hold it in one place. They divide it by job, and each portion answers a different question. The mixes below are illustrations, not recommendations.

Count what you already hold before choosing. At the 2023 Census, 66% of New Zealand households owned their home, so many people placing $1 million already have a large stake in residential property, often alongside KiwiSaver.

Is a rental property a better use of $1 million?

For many New Zealanders, a large sum instinctively goes into bricks and mortar, and the tax settings have become friendlier. Since 1 April 2025 landlords can claim 100% of their interest, and for sales from 1 July 2024 the bright-line period is two years. Bank lending to investors is still restricted: banks may make only 10% of investor lending above a 70% LVR, a setting the Reserve Bank left unchanged in August 2026.

The gross yield is modest. August 2026’s average asking rent of $637 a week comes to about $33,100 a year, roughly 4.4% of the REINZ national median of $750,000, before rates, insurance, maintenance and empty weeks. Prices have been soft as well. Cotality has national values 18.2% below their peak, though Canterbury, Otago and Southland are at new highs. Our overview of the New Zealand property market has more.

Owning and lending use the same asset in different ways. A landlord owns the house and waits for growth. A lender holds a registered mortgage over someone else’s property, earns an agreed rate and has the owner’s equity between the loan and the property’s value. You trade growth for income and a cushion, and some investors do both.

What would a NZ$500,000 co-funding slice involve?

Take the income-led mix. NZ$500,000 goes into loans co-funded with HomeSec, as two loans of NZ$250,000 or several smaller ones, because each investor picks their amount per loan, from NZ$100,000.

• Your position. A share of a specific loan, not units in a fund. The mortgage is registered with LINZ and names you for your exact contribution, alongside HomeSec, which co-invests in every loan it offers.
• Your information. Each due diligence pack sets out the property, borrower, purpose, exit, LVR, term and rate. The LVR is capped at 80% on residential security and set lower on commercial. Declining a loan costs nothing.
• Your income. Illustratively, a NZ$250,000 share at 12% p.a. earns NZ$30,000 over 12 months before tax, NZ$37,500 at 15% and NZ$45,000 at 18%. Across NZ$500,000 lent all year, that is NZ$60,000 to NZ$90,000. Terms of typically 1 to 12 months mean the slice may pass through several loans in a year.
• Your exit. Repayments arrive in your own bank account. For an early exit, HomeSec will purchase your share and return the principal on request.

Most of HomeSec’s income arrives when loans repay, and its own capital is in the same loans as yours. Our page for family offices and high-net-worth investors covers how larger investors use co-funding.

What does a secured income slice give up?

• Concentration. Each loan depends on one borrower and one property, which is why spreading the slice across several loans makes sense.
• No scheme cover. Protection comes from the registered mortgage, the equity below the LVR limit and the power to enforce and sell under the Property Law Act 2007.
• Timing. Repayment can be late, and enforcement takes months. Money needed on a set date belongs in loans that mature well ahead of it.
• No growth. A loan pays interest and returns capital. It won’t appreciate the way shares or property can.

Structure matters as much as rate. After Du Val went into statutory management in 2024, RNZ reported that investors in its Mortgage Fund were unlikely to benefit from recoveries. Alternatives to term deposits ranks the wider options by risk.

Which entity should hold each part?

Interest is taxed as income of whoever holds the investment: you, your company or your family trust. Lending is an exempt supply, so there is no GST. Companies can use a 28% RWT rate, while trustees pay 39% once net trust income tops $10,000, so some families hold different slices in different entities.

Trustees also have the Trusts Act 2019 to weigh: the section 30 duty to invest with the care and skill of a prudent person of business, and section 59’s list of relevant matters, among them diversification, the risk of capital loss and the length of the investment term. Your accountant will confirm which entity suits which slice, and our guide for family trusts and companies explains co-funding through each.

What is a sensible first step?

Answer three questions: when might you need the money back, how much income do you want from it, and how much price movement can you live with? The answers usually suggest the mix. If a secured income slice belongs in yours, register your interest and our Funding Manager will be in touch to take you through a live loan pack.