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KiwiSaver: your questions answered

Over recent weeks the financial markets have endured a period of increased volatility as the economic and social impact of COVID-19 has worsened. ANZ Head of Wealth & Private Bank Craig Mulholland answers some questions about KiwSaver.


Is KiwiSaver like a savings account?


KiwiSaver isn’t like a bank savings account or term deposit where you get a set rate of interest on your money. Instead, your money is invested in a range of investments including shares, bonds, and listed property.


The amount your KiwiSaver account earns depends on how these investments perform. If the value of those investments goes up, so might your KiwiSaver account balance, and vice versa.


Why has my KiwiSaver account balance gone down?


At the moment, some investment markets aren’t doing well, because the coronavirus pandemic has badly affected many businesses and caused a lot of uncertainty. As a result, the value of many KiwiSaver schemes’ investments has fallen – and that’s reflected in people’s KiwiSaver account balances, with growth funds being impacted more than conservative funds.


This is part of investing, and your KiwiSaver account balance can be expected to go up and down during the years you put money into it.


It’s important to think of KiwiSaver as a long-term investment, and not get too worried by the short-term ups and downs.


ANZ Investments is an active manager. This means experienced investment professionals are monitoring market events and information to manage funds during this significant market volatility.


Has someone taken my KiwiSaver money?


No. A lower KiwiSaver account balance reflects the lower value of the investments in your fund.


ANZ Investments has not taken any of your money.


The investments owned by ANZ Investments’ KiwiSaver schemes are held in a trust by the schemes’ supervisor by The New Zealand Guardian Trust Company Limited, who is independent of ANZ Investments.


Will my KiwiSaver account balance go up again?


Investment markets go up and down and this is normal. In the past few years, markets have had a very strong run and returns have been very positive, so we understand that recent fluctuations can come as a shock.


However it’s important to remember that ups and downs are part of investing. As markets recover, KiwiSaver account balances are likely to go up again.


What should I think about if I’m considering switching funds?


It’s understandable you may be worried after checking your balance on goMoney or Internet Banking. However, it’s important to remember that for most people KiwiSaver is a long-term investment. Movements in the market are part of investing.


Everyone’s situation is different and things change over time. Your fund choice should be based on your personal circumstances, for example your investment goals, timeframe and how much risk you’re willing to take.


By moving from a growth fund to a cash or conservative fund investors risk locking in losses and missing out on greater returns when markets recover.  But every person’s circumstances are different.


It is important people consider their own investment time frame and appetite for risk. A person nearing retirement or planning to buy their first home might have a different tolerance to risk than someone who is decades from their retirement.


Can I withdraw my KiwiSaver savings?


KiwiSaver is designed as a long-term investment to help you save for your retirement.


You can generally only begin withdrawing your KiwiSaver savings when you turn 65, or in special situations. The special circumstances include buying your first home (if you’ve been a KiwiSaver member for three years); or if your circumstances change and you are experiencing significant financial hardship, or have a serious illness.


Are there different types of KiwiSaver funds?


Yes. KiwiSaver providers offer a range of funds.


The choices differ across providers but typically include:


Conservative funds – these have a high proportion of assets invested in bank deposits and fixed interest investments, and a lower proportion in growth assets such as shares and listed property. These funds are considered lower risk but are likely to generate lower returns over the longer term.


Balanced funds – a mix of lower risk investments like bank deposits and fixed interest, and higher risks growth assets such as shares and listed property.


Growth funds – these have a high proportion of shares and listed property, with a lower level of bank deposits and fixed interest investments. They have more risk, but aim to deliver higher returns than conservative funds over the longer term.


Investors can check the Risk Profile Tool on our website for help to select a fund for their age, risk profile and investment timeframe.


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