Am I in the right KiwiSaver fund?

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To get the most out of your KiwiSaver savings, it’s important you have your money in the right type of investment fund.

A simple change in the type of investment fund you put your KiwiSaver into could add thousands to your KiwiSaver balance, without you having to do a thing.

Doesn’t the government look after KiwiSaver?

Short answer – no! KiwiSaver is managed by 26 different providers – some of them banks, some are independent financial companies. Each provider offers different KiwiSaver investment funds with differing levels of risk and return.

Broadly, the different investment fund types are:

  • Conservative
  • Moderate
  • Balanced
  • Growth

Out of the 26 KiwiSaver scheme providers, 9 companies have been appointed by the government as a default provider.

What’s a default fund?

If you were automatically enrolled in KiwiSaver by your employer, chances are you’re in a default fund. This is designed to be a temporary holding fund, offering minimal returns.

Default members are encouraged to switch into a fund that is better suited to their needs. It’s simple to figure out.  Most providers will have a quick quiz that will tell you within a few minutes. 

Are all default funds the same?

No. For example, at Booster we want to help Kiwis grow their savings as much as possible, so we don’t charge a member fee on our default fund until balances hit $10,000.

Also, we take responsible investing seriously. So, our Default Saver fund has socially responsible investing ethics applied to it. That means our members’ money is not being invested in sectors such as weapons, nuclear or tobacco manufacturing.

Every provider has their own approach so it’s important to find out about yours and make sure it’s a good fit for you.

Do I need to switch funds?

To maximise your KiwiSaver fund, it’s a good idea to move it into the right type of investment fund for you. For instance, if you’re more than 20 years away from retirement, or not planning to make a withdrawal soon (e.g. for your first home), a growth fund might be the best choice for you.

If you’re planning to retire soon, or withdraw your funds for your first home within 5 years, you might be better suited to have your KiwiSaver in a moderate fund.

But, isn’t a growth fund risky?

Like any investment, there are some risks. Although the stock market has ups and downs, over the long term, the general direction tracks upwards. So even though there might be some talk about ‘market corrections’ or ‘falls’, it’s not as catastrophic as you might think.

You could run the risk of losing more money by moving your KiwiSaver fund in and out of different funds over the short term, rather than investing it in a growth fund for a longer period.

How do I find out what fund I’m in?

Give your KiwiSaver provider a call to find out what fund type you’re in. Not sure who your KiwiSaver provider is? IRD can help you with that. (0800 549 472)