Yes, we’ve heard it so many times… “But I’ve seen a Milford, Simplicity, or Kernel KiwiSaver advert saying they have the best performance.” Do those adverts tell the full story? Do they look into your personal situation, understand your savings goals, and adjust them over time? We don’t think so.
When choosing a KiwiSaver scheme, many advertisements focus on recent high returns, but is that really the most important factor? With 15 years of KiwiSaver data now available, it’s clear that chasing past performance isn’t the key to long-term success.
Recent research shows that switching to a different fund based on recent returns doesn’t necessarily lead to better outcomes. Whether you hold, chase, avoid, or randomly select funds, the differences in final balances over time are minimal. This highlights that past performance is no guarantee of future results.
Appropriate asset allocation, fees and contributions.
Choosing an asset allocation that matches your goals—such as a more growth oriented or aggressive portfolio for long-term growth—can significantly impact your final balance. Many people chose to go into a ‘balanced’ or ‘moderate’ KiwiSaver fund in the early years – but very often this is not the right choice and they will be thousands of dollars worse off as a result.
Asset diversification within a fund is also important here.
Next on the list is lower fees. KiwiSaver funds with lower management fees tend to perform better over time, allowing you to keep more of your investment.
Finally, your contributions matter. When and how much you contribute are important and add up overtime. Don’t delay starting a KiwiSaver – the early years of contributing make a huge difference in the long run. We’ve seen many clients that were initially sceptical about KiwiSaver and therefore put off signing up – it’s not too late!
It isn’t rocket science, but it is important to get right – and relying on advertising simply isn’t the best way to select something that is so crucial to your long term financial well-being.
Things change over time – both for you as an individual and within the KiwiSaver investment market. Our job is to keep on top of the changes and opportunities in the KiwiSaver and investment markets and make sure it continues to match what you need.
The most important takeaway is that professional advice over the years can provide guidance tailored to your specific needs, helping you make informed decisions about your KiwiSaver. Talk to our team so you can optimize your KiwiSaver to achieve a comfortable and secure retirement, rather than relying on short-term trends or marketing claims.
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