Talk Money: October 14, 2015

(Paul Henry)
(Paul Henry)

Many New Zealanders are being too passive about the potential returns from their KiwiSaver investments, according to a new report.

There are three main types of KiwiSaver fund – conservative, balanced and growth. Growth funds have more exposure to shares, while conservative funds have more exposure to fixed-interest investments like bonds and cash.

Growth assets have a better long-term return but can be more volatile in the short-term.

KPMG has released a report from fund researcher Morningstar. It says an unnecessarily high concentration of KiwiSaver money is invested in conservative funds. Morningstar says that is mostly due to new KiwiSavers defaulting into a conservative scheme rather than choosing their own level of risk.

"As a rule of thumb, if you are aged between 25 - 40 you should be more disposed to a growth fund; as you have plenty of time to earn at a higher level and recover should the market fall," says KPMG's John Kensington. "If you are a little older, you might lean toward a balanced or growth fund."

Watch the video for the full Talk Money segment.