Whether retirement is 5 years away or 25 years away, your choice of KiwiSaver investment fund will play a big part in helping you realise your KiwiSaver dream.
“We all have different goals and different circumstances so the fund that’s right for your friend or colleague may not be the right one for you,” says Camilla Tumai, AdviceFirst Head of Partnerships and Adviser Engagement.
The best fund for you is based on how old you are now, when you want to withdraw your money (for retirement or first home), your attitude to risk and the type of lifestyle you want to enjoy come retirement.
Camilla says if it’s been a while since you last reviewed your KiwiSaver investment fund options, you may be in the wrong fund for your goals.
What are the fund options?
There are generally five types of funds:
- Defensive
- Conservative
- Balanced
- Growth
- Aggressive
“You don’t have to put all your savings into the one type of fund, most KiwiSaver providers will let you split your savings between the funds. How you do this is up to you, but it should be done with your goals in mind,” says Camilla.
What’s the difference between each fund?
Each fund is made up of a different mix of investments. These include bank deposits, bonds, shares, and property – also called growth assets. The percentage of growth assets in a fund determine not only the potential returns but the amount of risk. In other words – more growth assets = higher returns BUT the level of risk is higher.
So, while high growth funds will generate you more money in the long term, they get harder hit by market forces like COVID-19.
What’s a socially responsible investment fund?
Most KiwiSaver providers now offer socially responsible investment funds so that you match your financial goals with your values. Fund managers take Environmental, Social and Governance issues into account in the investment process of research, analysis, selection and monitoring of investments. Each fund manager uses a different criteria for this process so there are slight nuances between each of the investments available.
We’re here to help
If you’re not sure which fund to invest in, or even which KiwiSaver provider to choose, our advisers are here to help. They can work with you to determine your short- and long-term investment goals and develop a KiwiSaver investment strategy that’s right for you.
To get in touch with an AdviceFirst adviser just call 0800 438 238 or email letstalk@advicefirst.co.nz
