How to Pick the Right KiwiSaver Fund

Your KiwiSaver may be one of your largest assets. As such, the choice of what provider and what fund you choose is one of the most important decisions you can make to achieve your financial goals. KiwiSaver funds typically fall into one of five main types: Conservative, Moderate, Balanced, Growth, and Aggressive.

Picking the appropriate KiwiSaver fund involves considering various factors that align with your financial goals, risk tolerance, and investment preferences. As KiwiSaver experts it is our role to ensure we align your goals and requirements with a provider and fund that is going to be right for your specific situation. If you’d like a non-obligation free KiwiSaver report and recommendation, please complete our KiwiSaver Discovery Quiz. If you’re interested in learning more about how to pick the right KiwiSaver for yourself, please see these steps below to help you choose the right fund:

1. Understand Your Goals:

Begin by identifying your objectives for the KiwiSaver account. Are you saving primarily for retirement, your first home, or another specific purpose? Understanding your goals will influence the investment timeframe and risk you can afford to take.

2. Assess Risk Tolerance:

Consider your comfort level with market fluctuations and potential losses. Generally, higher-risk funds may yield higher returns over the long term, but they can also experience more significant short-term fluctuations. If you're uncomfortable with the idea of market volatility, a conservative or balanced fund might be a better fit.

3. Evaluate Investment Timeframe:

Your investment timeframe is how long you have until you need to access the money. It is crucial in determining the appropriate fund.

Within 3 years: If you want to withdraw for a first home or retirement within 3 years then the most important thing will be protecting your investment from volatility. This is because with such a short timeframe you want your money invested in something that will provide a moderate return without the risk your investment will be down at the time you need it. The best type of fund will be a Conservative or Moderate fund invested in mainly income assets such as bonds and term deposits. While this means that you may miss out on the higher long-term returns of equity assets, it means your investment will still be there for you when you need it.

4 to 9 years: With this timeframe you don’t want to risk too much volatility but you also don’t want to forego the potential higher returns from growth assets. The best fund for you will be a Moderate or Balanced fund with a more even allocation to both Growth and Income assets.

10 years plus: With 10 years or more until you need the use of your money, volatility doesn’t need to scare you. The most important thing for you is ensuring that your returns are maximised. The best fund for you will be a Growth or Aggressive fund that has a high allocation to Growth Assets compared to Income Assets. You can afford to ride the markets as they go up and down with the knowledge that over the long-term growth assets are expected to outperform income assets.

4. Research Fund Providers:

Different providers offer KiwiSaver funds with varying fees and performance histories. Research different providers and assess their track record and reputation in the market. Keep in mind that past performance is not a guarantee of future results.

You may also have a preference for socially responsible investment. Certain providers offer socially responsible funds that do not invest in certain things like weapons or tobacco. See our favourite ethical funds here.

5. Fees and Costs:

Consider the fees associated with the fund, as they can impact your overall returns. Often, higher fees represent a more actively managed fund with a larger team. You should try and look at past performance and the services provided by different providers to evaluate whether their fees are worth it to you.

6.  Review and Adjust:

Your financial circumstances may change over time, so it's essential to review your KiwiSaver fund periodically. If your goals, risk tolerance, or investment horizon shift, consider making adjustments to your fund choice accordingly.

Remember that KiwiSaver is a long-term investment, and your chosen fund should align with your financial goals and risk tolerance. Taking the time to research and choose the appropriate fund can significantly impact your savings and investment outcomes over time.

Want help and guidance to pick the right KiwiSaver for you? Reach out to us for a quick chat here, or if you would like our team to evaluate your needs and provide you with a complimentary KiwiSaver report then please complete our KiwiSaver Quiz below.

Compound Wealth are based in Mount Maunganui, Tauranga and offer KiwiSaver, Investment & Retirement Financial Advice to clients all over New Zealand.