She says that volatile periods are generally not the time to make sudden decisions about changing from one fund to another.
“You definitely want to make sure you are in the right fund for your age and goals. But changing fund is not a decision we would recommend making in haste, or when you might be frightened by news headlines talking about a market crash,” she says.
“Investment decisions should be made in calmer times if possible” she adds.
“What is likely to prove more correct over time? – a decision made under pressure or one made rationally?”
She says it is understandable people might have been worried after checking their KiwiSaver balance. However, it’s important to remember that for most people KiwiSaver is a long-term investment.
Movements in the market are part of investing and investment markets go up and down. But history shows that the overall long-term trend is up.
At ANZ around 3% of our members switched funds in March. Most of these members moved their money into more conservative funds. Although there were a very small number of people who asked to move to a more growth-oriented fund, and a few who wanted to open a new investment account.
Many of those who decided to switch to a more conservative funds might now be regretting their decision.
By moving from a growth fund to a cash or conservative fund investors risked locking in their losses and missing out on some potential returns as markets recovered.
Trisha Edmonds says advisers received many calls from worried clients. In most cases those clients discussed their concerns and then decided to leave things as they were.
“What many people wanted was some information or reassurance,” she says.
“Everybody’s circumstances are different. What works for one person doesn’t necessarily work for someone else.”
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 retirement.
If you’d like help with making this kind of decision you can try out ANZ’s online risk profile tool.