Investment Strategy for KiwiSavers

Read More

Volatility is a new experience for KiwiSaver investors who have known nothing but stable markets in recent years. There will be plenty of opportunity over the next two or three years for nervous investors to make bad choices about how their funds are invested.

There are two key principles for managing volatility. The first principle is, your investment in shares must be diversified to reduce risk. The second principle is, you must match your investment strategy to your investment time frame. When investors lose money by investing in shares it is because one of these investment principles has been violated. If you are in KiwiSaver, diversification is covered off by your fund manager – no worries there. However, your choice of investment option is critical.

Many KiwiSaver investors haven’t thought through what their investment time frame is. It is probably not the time at which you retire. For young KiwiSavers planning to purchase a first home, the investment time frame is the time at which they expect to withdraw their funds to use as a deposit. The shorter that time frame, the less exposure to shares they should have in their KiwiSaver fund. For most other investors, KiwiSaver funds will be spent at some time during retirement, but not necessarily at retirement. Given that the average 65-year-old lives to around 90, this means at least some of the funds will be invested for many years after retiring.

For investors with a long time-frame, short term volatility is nothing to worry about. In times of volatility, always review your investment goals and investment time frame. Make sure you have access to funds in stable investments such as bank deposits to cover your short-term spending, so you can ride out the changes in volatile investments. Then sit back and relax

Related Articles

Economy
Liz Koh

Budget Winners and Losers

The latest Government budget had something for everyone but while most households will be a few dollars a week better off, there are some clear winners and losers. In the winners’ corner are businesses, those on high incomes, and savers. The biggest losers are property investors who have built large portfolios financed partly by tax rebates.

Read More »

Top Up or Miss Out

The end of June is an important date for KiwiSaver members. The financial year for KiwiSaver runs from 1 July 2009 to 30 June 2010 and if you have contributed at least $1,040 to KiwiSaver during that time, you will be eligible for the full amount of Government tax credit to be paid into your KiwiSaver account in July.

Read More »

Responsible Investing

There is a worldwide trend for investors to want to make a positive contribution to the world by investing in companies that are socially and environmentally responsible. If you are passionate about the effects of climate change, the scarcity of food and water, and social or environmental policies in general, then you will no doubt wish to ensure that the companies in which you invest are going about their business in a manner that is consistent with your views.

Read More »

Helping You Live your retirement To the Max

Keep in touch

Fill in your details and we’ll get back to you in no time.