With more than three million people in KiwiSaver, it’s one of the best and most popular ways to save for your future.
But it can be challenging to know if you’re getting the most out of it. Here are three simple tips to help ensure you’re on track.
1. Think of it as an investment
Most of us think of KiwiSaver as a savings account, but it’s also an investment account.
The key benefit of an investment as opposed to a savings account is the ability to earn compound returns. The magic of compound returns means you can turn a small amount of money into a large amount of money, when it’s left to grow and compound over time. Even a small increase in returns can make a surprisingly large impact over time. For example, if your KiwiSaver provider achieves even slightly higher annual investment returns than average over your working life, it can usually add thousands of dollars to the amount you’ll have at retirement.
So, it’s worth considering choosing a KiwiSaver provider with a track record of delivering good returns. Although past performance is not a guarantee of the future, it does give an indication of how skilled your provider is at investing your money.
But where do you go to compare funds? There are a number of online comparison tools and surveys. One good one is the independent research in Morningstar’s latest KiwiSaver survey. It found Milford had the best performing Growth and Balanced Funds over the past decade. The research also showed Milford had the best performing Conservative Fund over the past five years and Milford’s newly-launched Aggressive Fund was the best performing Aggressive Fund over the past year.
2. Get good advice
Research from the Financial Services Council shows 75 percent of people feel their overall wellbeing is linked to their financial wellbeing, yet most of us don’t seek financial advice.
We often get advice on other things in life, but the reality is financial advice has not been that accessible. That’s changing though. Financial advice is evolving and technology is making it much more accessible to everyone.
For example, at Milford they recently launched online digital advice. This gives their 40,000 KiwiSaver clients access to goals-based personalised advice on their KiwiSaver account – at no extra cost.
Having this type of advice at your fingertips can help you identify your KiwiSaver goal, be that buying your first home or retiring happily, and ensure you’re on track by being in the right fund and contributing the appropriate amount.
3. Follow your heart
Sustainable investing, sometimes referred to as ethical or responsible investing is a trend that’s becoming more popular with investors. People are wanting their money supporting good quality businesses which can have a positive impact on the environment and society.
Best of all, research from the International Monetary Fund suggests you generally do not have to accept lower investment returns to invest sustainably. At Milford, it is clear the best companies are those committed to sustainable business practices and that over time, these businesses should also deliver better investment returns.
So, it’s worth shopping around to find a provider that offers solutions that match your values. There are online tools to help, but sustainable investing means different things to different people, so it pays to do your own research. A good place to start is on your KiwiSaver provider’s website.
Bringing it all together
We all want peace of mind when it comes to our money. There’s a lot of comfort in knowing you’re on track and having the right KiwiSaver partner in your corner is a good place to start.
This is intended to provide general information only. It does not take into account your investment needs or personal circumstances. It is not intended to be viewed as financial advice. Before making any financial decisions, you may wish to seek independent financial advice. Please note, past performance is not a guarantee of future performance.
This article was created for Milford