Kickstart your KiwiSaver in 2024 📈
January is a time to look at your life and see where you want to make improvements. From eating better to getting fitter and losing weight, the list of improvement possibilities is long.
But for millions of people, money is the biggest concern.
With this in mind, we have come up with five tips that KiwiSaver members can use to help bolster their savings accounts. Now is as good a time as any to look for Investment advice, find out how KiwiSaver works, and think about how you are invested in KiwiSaver. Take positive action on what will be one of your biggest and most important assets in the future.
Here are Compound Wealth’s top five tips on how to kick-start KiwiSaver and maximise your savings in 2024:
1. Make sure you’re in the right KiwiSaver fund appropriate to your savings goals and timeframes
Most KiwiSaver providers offer a range of investment funds where we can select which one our savings are allocated to.
There are five main types of KiwiSaver fund:
Aggressive
Growth
Balanced
Conservative
Defensive
To maximise your KiwiSaver fund, it’s a good idea to choose the right type of investment appropriate to your savings goals. For instance, if you’re more than 20 years away from retirement or not planning to make a withdrawal soon (e.g. for your first home), a growth fund might be the best choice for you. Note that a higher proportion invested in growth assets typically means greater ups and downs in value, with the investment being more likely to produce a negative return in any given year.
If you’re planning on making a significant withdrawal from your KiwiSaver once you reach the age of 65, or if you are wanting to make a withdrawal for a first home within the next 5 years, it may be more appropriate to have your KiwiSaver in a more conservative type fund.
A simple change in the type of investment fund you put your savings into could add thousands to your KiwiSaver balance, without you having to do a thing.
2. Check your contribution rate
Contributing more to KiwiSaver is a great way to boost your numbers. Raising your KiwiSaver contribution rate to 8 percent from 3 percent or 4 percent will potentially give you hundreds of thousands of dollars more in retirement.
Most of that money will likely come from market gains over the years. The more you put in now means the more time it has to grow, and thanks to the power of COMPOUNDING, the more you’ll have in the long term. Contact your employer to increase your KiwiSaver contribution rate; your future-self will thank you.
3. Remember it’s a long game
If you are investing for the long haul, as most KiwiSavers are, it pays to ignore short-term market movements and invest for long-term growth.
The trouble is, fighting your emotions while investing isn’t easy. Loss aversion tells us that humans are hardwired to hate losses twice as much as we enjoy gains, and this fear of losses can lead investors to make bad decisions that seriously impact their long-term returns.
If you are investing for the long haul, it pays to look past the short-term noise, focus on contributing regularly, and invest for growth. Make the most of Dollar Cost Averaging and embrace market volatility in the short-term because it will only benefit you down the road.
4. Have a retirement income goal in mind
What do you want your retirement to look like? Is regularly travelling overseas something that appeals to you? Or to have a bach by the sea or live comfortably within your means? Many people think little about how they will spend their time in retirement, but you should. After all, the biggest use of your time in the years leading up to retirement—working—will be no more.
Here are a few questions to ask yourself as you begin to paint a picture of your retirement future:
When do you want to retire?
What annual income would you like to receive in your retirement years?
What does the value of my savings/investments need to be to draw this income?
5. Diversify
Most Kiwis are unaware they are already well-invested in the New Zealand market.
Your house, your job, your bank deposits – these are already tied up in New Zealand-based investments, so considering where your KiwiSaver account is invested is important. Having it invested in different asset classes, such as international shares, can provide some protection against major shocks to the domestic economy.
Take a look at where your KiwiSaver scheme provider invests its funds, and understand the benefits of different investment approaches.
Looking for KiwiSaver advice?
As KiwiSaver experts, we ensure you get the most out of your investment.
At Compound Wealth, our specialised financial and KiwiSaver advisers deliver industry-leading advice with clarity so you can invest confidently.
We are not a KiwiSaver fund provider. Instead, we are financial advisers who help our clients to identify their best KiwiSaver course of action. This means that we only succeed when our clients succeed.
This mentality is reflected by the 1,000 plus Kiwis who’ve trusted our advice on over $100 million in funds. If you would like to take action in 2024 and make sure your KiwiSaver investment is optimised for your goals, please get in touch or complete our fact-find link below! We will send you a free personalised KiwiSaver recommendation. As we are remunerated by the KiwiSaver providers we work with, our service is complimentary. This allows us to help more people compound their wealth!
Compound Wealth is a KiwiSaver, Retirement and Private Wealth Financial Advice Firm based in Mount Maunganui, Bay of Plenty.