When you first signed up to join Kiwisaver, do you remember researching your options about the best provider to invest with? If you can only recall signing the enrolment form to get started, chances are you are signed up to a default Kiwisaver fund!

Investing in a default fund means that your Kiwisaver is automatically invested in a ‘balanced’ fund with a government-appointed provider. A balanced fund is a middle-of-the-road option, intended to provide medium returns over the long-term, by investing in a mix of low-return investments (such as cash or bonds) and higher-return investments (such as shares) to balance protecting your savings and growing them over the long term

While a default fund has its place, providing a starting point for investing in Kiwisaver and kickstarting saving towards retirement, it pays to do your research to ensure that your Kiwisaver fund is working best for your situation so you can achieve the best possible return on your investment!

A default fund may not the best option for the majority of people – why? The reality is that most of us are investing in Kiwisaver for the long term (10 years +) and by investing in a balanced fund, we risk missing out on the potential gains and opportunities that a growth fund offers.

On the flip side, there are other important milestones along the way, such as purchasing a first home or coming up to retirement, where a more conservative fund would better serve our financial goals and reduce the chances of our investment dropping too much right before needing to withdraw the money.

There are also a lot of unknowns when you enrol in a default scheme – are you invested in the right fund for your stage of life? Are you paying the correct amount of PIE tax? Can you trust the investment strategies of your Kiwisaver provider? Does your Kiwisaver provider offer good service and are they easy to contact? Are they an active fund manager and respond to what the global markets are doing?

A long-term investment in Kiwisaver is expected to be a journey of highs and lows, however when you are still a long way from retirement, you are in a better position to take some risk with your investment, as you have enough time to see your investment recover if it does take a fall.

If you haven’t thought much about your Kiwisaver and where it is invested – now is the time! Get in touch as we are always happy to chat to you and give you advice on how to achieve the best possible return on your investment, which could significantly impact your savings at retirement!


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