The $200,000 mistake thousands of KiwiSavers made
Thousands of KiwiSaver members who switched their investments into less risky funds when Covid-19 first hit still haven't switched back - and it could cost them hundreds of thousands of dollars.
There was a surge in switching from growth funds to conservative funds in March 2020, when sharemarkets around the world wobbled.
Westpac said it processed 18,140 requests to switch in that time.
Markets soon recovered, but 27%of those KiwiSaver members never switched back to more growth-focused assets, Westpac said.
Another 17% took more than a year to switch back and 12% switched back in between six to 12 months.
If an investor is investing for a long time - such as for retirement - growth funds often deliver better outcomes because they tend to have higher returns, although they are more volatile. Shifting from a growth fund when markets are weak can mean locking in losses.
Morningstar research shows that, as a group, conservative KiwiSaver funds have returned an average 4.1% a year over 10 years, compared to 8.2% for growth funds and 9.1% for aggressive.
Westpac projected that someone with $25,000 in KiwiSaver who switched from a growth fund to a conservative fund on March 20, 2020, would end up with $387,938 in 2054.
But if they had left their money in a growth fund, they would have $615,423 - boosting their final outcome by more than $225,000.
If they had shifted in March 2020 and then moved back a year later, they would have $588,955 in 2054.
Even over a shorter term, the impact can be seen. Someone who shifted on March 20, 2020 and left their money in a conservative fund would have $120,880 in 2034. If they shifted back after a year, they could have $145,693 and if they had not shifted, and stayed in growth, they would have $156,472.
That assumes that person is earning the median wage, getting a 3% pay rise a year, and making 3% KiwiSaver contributions matched by a 3% employer contribution.
Westpac head of KiwiSaver Nigel Jackson said the number of people who had not switched back highlighted the "education gap" for New Zealanders in relation to long-term saving and retirement.
"Being in the right fund is really important and being in the wrong fund will cost you money in the long term."
Westpac has now launched a new high-growth fund that will have 100% growth assets and Jackson said it would be important that investors understood the possibility for volatility, as well as the potential returns available, so that they could stick with it and not switch out at the wrong moment.
"It's one of those challenges, you can tell people it's going to happen but it's still a challenge for them when it does happen. It's critical they understand the possibility is there so they have the context. If they don't have the right information, that's the point of highest risk when they can lock in unrealised losses by transferring to lower-risk funds and experience that loss at retirement."
Westpac NZ general manager of product, sustainability and marketing Sarah Hearn agreed long-term investors who were not in the right fund would probably short-change themselves at retirement.
"The Covid-19 experience and more recent market fluctuations should serve as a reminder to regularly think about your investment goals, whether you're saving for retirement or a first home deposit. That includes checking you're in the right type of fund for you and your stage in life," she said.
"Market volatility is normal and expected. Those of us who aren't nearing retirement will see our balances affected by more economic peaks and troughs before we get there."
The latest Financial Markets Authority annual KiwiSaver report showed growth funds now represent 46% of total funds under management, with $51.4 billion invested, and a total of 1.53 million investors. This is more than double the $24.5b in 2021.
=============================================
www.1news.co.nz...
=============================================
Best way to use leftovers?
I'm sure you've got some excess ham at home or cold roast potatoes.
What are some of your favourite ways to use leftover food from Christmas day? Share below.
Te Pūrākau o Te Rangatira Ngākau Hūmarie - Day 34
The Tale of the Humble Leader
In a small Māori village near the coast of Aotearoa, the whānau were preparing for Te Rā o te Kirihimete (Christmas Day). It was a time of celebration, sharing, and remembering the values of aroha (love), manaakitanga (hospitality), and kotahitanga (unity). However, this year, the village faced a challenge. Their rangatira, Wiremu, had grown distant and prideful, burdened by his position.
Wiremu often made decisions alone, thinking that his wisdom and authority were enough to guide the iwi. While the villagers respected him, they felt unheard, and the spirit of unity began to fade.
As the Kirihimete celebrations approached, the kaumātua, Hinewai, decided to intervene. She invited Wiremu to the marae one evening, where she shared a story about Tāwhaki, the demigod who ascended to the heavens not through power, but through humility and service.
“Wiremu,” Hinewai said, “even the greatest leaders are at their strongest when they serve their people. Leadership is not about standing above others but walking beside them.”
Wiremu reflected on her words but was unsure how to change.
The Lesson of the Whetū (Stars)
On Christmas Eve, as the village prepared for their festivities, a fierce storm rolled in from the sea. The winds howled, and the rain poured, threatening to ruin the celebration. The central whare kai (dining hall) began to leak, and the decorations the tamariki had made were soaked. The people gathered anxiously, unsure of how to proceed.
Wiremu stood at the edge of the marae, looking at the chaos. In that moment, Hinewai’s words echoed in his mind: “Even the greatest leaders serve their people.”
Without hesitation, Wiremu took off his korowai (cloak of leadership) and joined the villagers. He grabbed buckets to catch the rain, helped rebuild the decorations, and reassured the tamariki that their work would be restored. His humility inspired others, and soon the entire iwi was working together, laughing and singing as they prepared the whare for the celebration.
A Kirihimete Under the Stars
When the storm cleared, the sky was filled with bright whetū (stars). The villagers gathered around a glowing fire outside the whare, sharing kai and stories of gratitude. Wiremu stood among them, no longer as a distant rangatira, but as a friend and servant of his people.
Under the starlit sky, Hinewai stood and addressed the iwi.
“This Kirihimete, we are reminded that true leadership is like the brightest whetū. It does not shine to outdo others but guides them through darkness. Wiremu has shown us the power of humility, and through his service, we have rediscovered our unity.”
Wiremu bowed his head humbly. “Tonight, you have all taught me that a leader is nothing without their people. Let us carry this spirit of kotahitanga and aroha into the new year.”
The villagers cheered, and the spirit of Te Rā o te Kirihimete shone brightly in their hearts.
Moral of the Story:
Leadership is not about authority or pride but about humility and service. Like the whetū that guide travelers, a true leader walks alongside their people, bringing light and unity through service and aroha. At Christmas, we are reminded of the importance of giving, humility, and leading with love.
⚠️ DOGS DIE IN HOT CARS. If you love them, don't leave them. ⚠️
It's a message we share time and time again, and this year, we're calling on you to help us spread that message further.
Did you know that calls to SPCA about dogs left inside hot cars made up a whopping 11% of all welfare calls last summer? This is a completely preventable issue, and one which is causing hundreds of dogs (often loved pets) to suffer.
Here are some quick facts to share with the dog owners in your life:
👉 The temperature inside a car can heat to over 50°C in less than 15 minutes.
👉 Parking in the shade and cracking windows does little to help on a warm day. Dogs rely on panting to keep cool, which they can't do in a hot car.
👉 This puts dogs at a high risk of heatstroke - a serious condition for dogs, with a mortality rate between 39%-50%.
👉 It is an offence under the Animal Welfare Act to leave a dog in a hot vehicle if they are showing signs of heat stress. You can be fined, and prosecuted.
SPCA has created downloadable resources to help you spread the message even further. Posters, a flyer, and a social media tile can be downloaded from our website here: www.spca.nz...
We encourage you to use these - and ask your local businesses to display the posters if they can. Flyers can be kept in your car and handed out as needed.
This is a community problem, and one we cannot solve alone. Help us to prevent more tragedies this summer by sharing this post.
On behalf of the animals - thank you ❤️
Loading…
