With share markets off to a bumpy start this year and the deadline to receive your KiwiSaver Government contribution fast approaching, now is a good time to check-in and make sure your KiwiSaver account is on track.
Award-winning KiwiSaver manager Milford looks at what you can do to make the most of your KiwiSaver account this year.
Making the most of the Government contribution
In general, if you are a contributing KiwiSaver member aged 18 to 64 and mainly live in New Zealand, then you should be eligible for the annual Government contribution. The Government will contribute 50 cents for every dollar that you contribute to your KiwiSaver account, up to a maximum of $521.43 each year. It's worth noting that employer contributions are not taken into account in determining the amount of the Government contribution. The KiwiSaver year runs from July 1 to June 30.
If you're working full time and contributing regularly out of your wages, you will probably have contributed enough to receive the full $521.43. But if you're not sure, it's worth checking with your KiwiSaver provider to find out if you need to top up. If you can afford it, it's a great way to give your KiwiSaver account a bump.
Should I be concerned about volatile markets?
With markets experiencing a rough patch, you may be wondering if there are any moves you should be making with your account. If your KiwiSaver provider is an active manager, they will be doing their best to take advantage of the opportunities of this changing landscape by adjusting the investments in the fund. For individual KiwiSaver investors it's important to think about the long term and stay the course as best you can. Although it's difficult to see your investments moving down in value, continuing to contribute and staying invested through the ups and downs tends to deliver better results over the long term.
Setting the right strategy and sticking with it
When setting your KiwiSaver strategy, you'll firstly want to make sure you're with a KiwiSaver manager you trust. One that can provide access to advice, offers excellent service and has a track record of delivering strong long-term investment returns. Once you're comfortable with the KiwiSaver manager you've chosen, you'll want to make sure you're in the right fund, by considering these three things:
Your investment goals: For example, are you saving for a first home? Are you saving for retirement? Or perhaps you're already in retirement and using your KiwiSaver to draw an income to help fund your lifestyle.
Your investment timeframe: Your goals will impact your timeframe. If you're saving for a first home in the next couple of years, you have a short investing timeframe. However, if you have many years until retirement, then your timeframe is a long one.
Your risk tolerance: This is how comfortable you are with the trade-off between risk and return. Higher-returning funds are also higher-risk. Are you happy to accept more short-term falls in value if you're more likely to get higher returns in the long term? Everyone's risk tolerance is different – if you're curious about your own, there are tools online to help.
Working through these steps will help you choose the right strategy for you. If you're not feeling confident at this stage, don't worry, you don't have to go at it alone.
Getting advice can help
Another way to set and reach your investment goals is to seek advice. Whether that's a Milford Adviser, a financial adviser in your community or one of the online advice tools, they can help you to set your goal and create the right plan to achieve it.
Research by the Financial Services Council in 2020 showed that New Zealanders who seek advice save more, invest more, travel more and overall have improved wellbeing. It also showed those who get advice have KiwiSaver balances over 50 percent larger than those who don't, and have greater peace of mind and confidence in making financial decisions.
If you're keen to get started, then check out Milford's Digital Advice Tools for some expert guidance.
Disclaimer: This article is intended to provide you with general information only. It does not take into account your objectives, financial situation or needs. Please read the Milford KiwiSaver Plan Product Disclosure Statement as issued by Milford Funds Limited at milfordasset.com. Before investing you may wish to seek financial advice. For more information about our financial advice services visit milfordasset.com/getting-advice. Past performance is not a reliable indicator of future performance.
This article was created for Milford.
