Which Investment Accounts to Use First
There are two main buckets of investment accounts: retirement accounts (super in Australia, KiwiSaver in New Zealand) and everything else (shares, ETFs and managed funds you hold in your own name). Retirement accounts come with tax breaks and, often, money from your employer or the government. That is the single biggest edge available to everyday investors.
The order you fill them in matters more than which specific investments you pick inside them.
Reading from New Zealand? Choose New Zealand above.
Australia: Superannuation
Your employer must pay Super Guarantee of 12% (from 1 Jul 2025) of your earnings into your super fund. Under Payday Super, it must reach your fund within 7 business days of each payday (from 1 Jul 2026). You don’t have to contribute anything yourself to get it.
Super is locked away until you meet a condition of release. The main ones are reaching your preservation age of 60 (from 2024-25) and retiring, or turning 65 (as at Oct 2026) whether or not you still work.
The Hierarchy of Saving (Australia)
Generally, work through these in order:
- Check your employer super is being paid, and that your fund’s fees are low. If you have several funds, consider combining them so you aren’t paying fees twice.
- Low income? Collect the free money. If you earn under $64,293 (2026-27) and make an after-tax contribution, the government may add a co-contribution. You get the full $500 (2026-27) on an income up to $49,293 (2026-27), and it tapers to $0 at $64,293. If your income is $37,000 or less (2026-27), the Low Income Super Tax Offset refunds the 15% tax on your contributions, up to $500 (2026-27). That rises to $810 (from 1 Jul 2027), for incomes up to $45,000 (from 1 Jul 2027).
- Salary sacrifice, if your income is above the 15% tax bracket (2026-27). Money you sacrifice into super is taxed at 15% (2026-27) instead of your marginal rate.
- First Home Super Saver scheme, if you’re saving for your first home. You can put in up to $15,000 a year and $50,000 in total (from 1 Jul 2022) of voluntary contributions and withdraw them later for a deposit.
- Invest outside super (ETFs or managed funds in your own name) for goals before retirement, or once you reach the caps.
Contribution Caps
| Contribution type | Cap (2026-27) | How it’s taxed in the fund |
|---|---|---|
| Concessional (employer super, salary sacrifice, deducted personal) | $32,500 | 15% contributions tax (2026-27) |
| Non-concessional (after-tax money you put in) | $130,000 | No contributions tax (already taxed as pay) |
- Concessional cap: it was $30,000 (2025-26). If your total super balance was under $500,000 (on 30 Jun 2026, for 2026-27), you can also use unused cap from up to 5 earlier years.
- High earners: if your income plus concessional contributions is over $250,000 (2026-27), Division 293 tax adds another 15% (2026-27).
- Large balances: extra tax applies above $3 million (2026-27) in super. It doesn’t affect most people.
Salary Sacrifice: Try the Numbers
Salary sacrifice means asking your employer to pay part of your pre-tax pay straight into super. It counts towards the concessional cap along with your employer’s 12% (from 1 Jul 2025). Your employer can’t use it to reduce the Super Guarantee they owe you.
Salary Sacrifice vs Take-Home Pay (Australia, 2026-27)
Simplified: compares 15% (2026-27) contributions tax with your marginal tax rate (2026-27) plus the 2% Medicare levy (2026-27). It includes the Low Income Tax Offset and the Low Income Super Tax Offset (2026-27), but ignores Medicare levy reductions for low incomes and HELP repayments. Rates are for Australian residents. Check ato.gov.au, or ask a registered tax agent.
Investing Outside Super
This is a standard investment account in your own name. There are no contribution limits and no restrictions on when you can access your money. You pay tax on the income each year.
- Capital gains discount: if you’re an Australian resident and hold an investment for at least 12 months, you pay tax on only 50% of the gain (for gains up to 30 Jun 2027).
- Indexation replaces the discount (from 1 Jul 2027): under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026, the 50% discount is replaced by indexing your cost base for inflation, with a 30% minimum tax on real gains (from 1 Jul 2027). Gains made before then keep the 50% discount.
- Franking credits: dividends from Australian companies often come with franking credits, your share of the company tax already paid. You count them as income and get them back as a tax offset, which can be refunded if it’s more than your tax.
Reading from Australia? Choose Australia above.
New Zealand: KiwiSaver
KiwiSaver is a voluntary retirement scheme. If you’re employed and in KiwiSaver, you, your employer and the government all contribute.
| Who | Contribution |
|---|---|
| You | 3.5% of pay by default (from 1 Apr 2026), rising to 4% (from 1 Apr 2028), or 4%, 6%, 8% or 10% if you choose |
| Your employer | At least 3.5% of your gross pay (from 1 Apr 2026), rising to 4% (from 1 Apr 2028) |
| The government | 25c for every $1 you contribute, up to $260.72 a year (from 1 Jul 2025) |
- Employer contributions are taxed. Employer superannuation contribution tax (ESCT) is taken out before they reach your account, so you receive less than the full 3.5% (from 1 Apr 2026).
- Government contribution: you need to contribute at least $1,042.86 (from 1 Jul 2025) a year to get the full $260.72 (from 1 Jul 2025). You don’t qualify if your taxable income is over $180,000 (from 1 Jul 2025). It’s paid from age 16 to 65 (from 1 Jul 2025).
- Under 18: 16 and 17 year olds get the government contribution (from 1 Jul 2025) and employer contributions (from 1 Apr 2026).
- Lower rate for a while: you can apply to contribute 3% for 3 to 12 months (from 1 Apr 2026).
You can withdraw KiwiSaver at 65 (as at Oct 2026), the NZ Super age. You can also withdraw early for a first home: after 3 years of KiwiSaver membership, you can take out everything except $1,000 (as at Oct 2026). Savings transferred from Australian super can’t be withdrawn for a first home. Withdrawals are also allowed for significant financial hardship.
The Hierarchy of Saving (New Zealand)
Generally, work through these in order:
- Join KiwiSaver and contribute at least the default rate, so you receive your employer’s contribution.
- Contribute at least $1,042.86 a year (from 1 Jul 2025) to get the full $260.72 (from 1 Jul 2025) government contribution. If you’re self-employed or not working, you can pay this in yourself.
- Pick the right fund type. A growth fund suits a long time horizon, and fees matter (see Investment Choices).
- Invest outside KiwiSaver in PIE funds or ETFs for goals before 65, or once you’ve covered steps 1 and 2.
Investing Outside KiwiSaver
This is a standard investment account in your own name. There are no contribution limits and no restrictions on when you can access your money. You pay tax on the income each year.
- No general capital gains tax: New Zealand doesn’t tax capital gains in general, though specific rules exist (such as the bright-line test on residential property).
- PIE funds: most KiwiSaver schemes and many managed funds are portfolio investment entities (PIEs). Their returns are taxed at your prescribed investor rate (PIR) of 10.5%, 17.5% or 28% (as at Oct 2026). The top PIR is below the 33% and 39% top income tax rates (from 1 Apr 2026).
- Foreign shares you hold directly: if their total cost is over $50,000 (as at Oct 2026), they fall under the foreign investment fund (FIF) rules. You’re then usually taxed on 5% (as at Oct 2026) of their opening market value each year (the fair dividend rate method). A bill to raise the threshold to $100,000 was introduced on 10 Sep 2026, but it is not law yet. If it passes, the new threshold applies back to 1 Apr 2026.
- Shortcut: an NZ-based PIE fund that holds global shares handles the FIF tax inside the fund.
This guide is for informational purposes only and is not financial advice. Read the full disclaimer.