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Five Tips for Choosing the Right KiwiSaver Scheme in NZ

Date Jul 14, 2020
Blog category Kiwisaver
Blog category Mortgage
By Michael Speight
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 Choosing the right KiwiSaver scheme can be a bit overwhelming. It doesn’t help when KiwiSaver providers also use their own unique set of naming conventions and jargon. In this blog post, we’ll provide you with tips for choosing the right KiwiSaver fund for your needs.

Compare KiwiSaver fund performance

One of the most important criteria for choosing a KiwiSaver scheme has to be the fund performance. All KiwiSaver providers have a range of different funds available to choose from. Funds are based mainly on the level of risk you are willing to take on your investment. Compare KiwiSaver funds and assess the level of risk versus the potential return you may receive from a specific scheme. 

Check KiwiSaver fees

KiwiSaver includes a range of fees such as admin, annual, management and, in some cases, performance-related fees. Fees can hurt your investment, so when you choose a fund - and provider - take a look at what fees they apply for their services. It may seem like a little amount in the short-term, but if you are involved with KiwiSaver for over 20 years and aggregate all of the fees you’ve paid, it may be in the thousands of dollars. 

Look at how your money will be invested

Each KiwiSaver scheme invests your money differently. If you choose a low-risk fund, most of your investments will go toward low-return, less-risky options such as bank deposits and fixed-interest investments. Whereas, if you choose a very aggressive and high-risk fund type, most of your investment will go toward shares. The level of risk you choose should be based on what level of deduction you can afford to take.

Here is a summary of where your money may be invested based on risk level:

1. Low-Risk fund: Safe options such as bank deposits or other fixed-interest investments.
2. Low-to-Medium-Risk fund: Mainly bank deposits and fixed-interest investments as well as growth assets such as shares and property.
3. Medium-Risk fund: An equal split between high-risk growth assets such as shares and property, and stable investments including fixed-interest and bank deposits.
4. Medium-to-High-Risk fund: A high majority on shares and property but with some investments in bank deposits and fixed-interest investments.
5. High-Risk fund: Mainly shares with a high-risk, high-reward payout.

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Research about KiwiSaver reporting frequency

KiwiSaver is essentially an investment, so most importantly you want to make sure your returns are at a rate you are happy with. Regular reporting is important to remain fully aware of what your returns are - it also makes it easier for you to asses whether you should switch KiwiSaver funds. Reporting helps to see where your investments are performing well and where there may need to be a further assessment.

KiwiSaver comparison tools help you to assess other potential funds which may interest you as well.

Do they provide ongoing KiwiSaver advice?

Getting ongoing KiwiSaver advice is invaluable in making sure you maximise your potential KiwiSaver returns. A KiwiSaver consultant can help you in many different areas. For example, getting advice when your funds are performing poorly and getting actionable advice to restore performance is vital. While a KiwiSaver consultant can help ensure you’re on the right scheme, a mortgage broker can help you through the process of buying your first home. When you’re ready to invest your KiwiSaver in buying a home, be sure to find a local mortgage broker. They can help you compare mortgage rates, give advice around the home buying process, negotiate on your behalf and much more.

For more information about KiwiSaver providers and schemes, try our KiwiSaver Comparison Tool and compare a range of KiwiSaver funds. 

 

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