Saving you from KiwiSaver's pitfalls
Just being in KiwiSaver doesn’t mean you can kick back and assume everything will be fine. There are lots of hidden factors to consider, so we’ve put together a list of KiwiSaver ‘watch outs’ which your Britannia adviser can help you easily navigate. If any of the points raised in the following article potentially affect your KiwiSaver investment, please don’t hesitate to get in touch.
- Is your KiwiSaver fund appropriate for your age? It’s important to consider what life stage you’re at when it comes to investing in KiwiSaver. What we often see is that Kiwis are invested far too conservatively. The reality is, the more time you have, the greater exposure you should have to growth assets such as shares and listed property. History shows that over the long-term, such a strategy out-performs a more conservative approach, and if this isn’t addressed early on, it could have a big impact on you meeting your retirement goals.
- Are you in the right fund to meet your goals? Many KiwiSaver investors have been allocated to a Default Fund. This means that at the time of joining, the government automatically allocated them a fund which is usually, by nature, conservative. Such funds are often not suited to many of the people placed in them. These funds are generally like treading water; you’re afloat but make very little progress.
- Does a volatile investment mean I am in the wrong KiwiSaver fund? The higher the exposure you have to growth assets, the more fluctuations in the value of your investment you should expect, particularly over short to medium time horizons. But this doesn’t necessarily mean you are in the wrong fund. If you have any concerns about the fund you’re invested in, please talk to us so we can assess if it is right for you.
- Are you contributing enough? Just because you’re making contributions along with your employer, don’t assume for a moment that you’ll have enough when you retire. Chances are you won’t, so if you haven’t already spoken to your Britannia adviser about this, give us a call so we can make sure your contributions will give you the best possible chance of meeting your long-term retirement goals.
- I’m going to cash-in my KiwiSaver when I hit 65 and travel the world. We know from experience that many people withdraw their money at age 65 and spend it straight away, but unfortunately this can cause problems and add to worries later in retirement when money can become tight. The good news is that we have a product called the Lifetime Income Fund, where you have the option to re-invest your investment from KiwiSaver (or any other source) and it will provide you with an income for life (it’s a combination of investment and insurance). Visit our website for more information or call your Britannia adviser and we can talk to you about this option.
If you take anything away from this article, let it be these two words – don’t assume. Don’t assume all KiwiSaver Schemes are the same and don’t assume you’re in the right fund. There are big differences between the way funds are invested and their performance and returns over time. It’s our job to find the KiwiSaver fund that best aligns with your goals and objectives, and help you develop a financial plan for your retirement. So if you haven’t spoken to your Britannia adviser recently, get in touch now.
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