Here are five easy things to check to make your KiwiSaver money work hard for you.
Tweak 5. Are you in the right fund?
The start of the year’s a great time to review whether your KiwiSaver money’s invested in the right fund for you. This simple choice could boost your savings by thousands of dollars over time. It’s worth having a quick look to make sure you’re in the right fund.
Tweak 4. Check your contributions
KiwiSaver works by putting together your money (at least 3 per cent of your pay) with your employer’s contributions and free money from the government. Then the money is invested and should grow over time. How much are you putting in?
Maybe your financial position this year’s looking a bit better than last year and you might be able to put in a bit more, say 4, 6, 8, or even 10 per cent. The more you put in, the bigger your balance should get over time.
Tweak 3. Are you paying too much tax?
Your KiwiSaver money is taxed at a rate called a PIR (short for Prescribed Investor Rate). If you pay too much, most tax can be refunded by the Inland Revenue Department (IRD), but the rules for KiwiSaver are different. If you pay too much tax on your KiwiSaver money, you can never get it back. And, if you pay too little, that’s a problem too.
Tweak 2. Are you happy with your fees?
KiwiSaver providers charge you fees on your KiwiSaver account in return for investing your money. It’s worth looking at how much you’re being charged. What are you getting in return? Maybe you’re happy with how your fund’s performing, or maybe you’re getting good value in other areas.
Look at the last statement from your provider, which shows your total fees for the past financial year. If it seems too much, check it with Sorted’s Smart Investor tool to see what other providers are charging.
Swapping to a fund with lower fees can make quite a difference to your balance over time.
Tweak 1. Check your returns
If your returns have been consistently below average, that’s not good. Use Sorted’s Smart Investor tool to compare providers’ and funds’ returns.
Avoid comparing returns over a short timeframe, like just the past three months. KiwiSaver is a long-term investment, so returns over three months may not matter so much unless you are eligible for access soon.
Published 15 April 2019
Story by Claire Connell, JUNO
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