It’s normal to feel confused about your KiwiSaver account during these volatile times. We’ve compiled a list of commonly asked questions.
Why is my balance going down?
Your KiwiSaver money is invested in shares, in the financial markets. Shares are tiny slices of a company. Lately, the coronavirus outbreak has had a big effect on businesses and economies, which has made the markets go down.
Has the government spent all my money?
No. Your KiwiSaver account is your account. No one else can touch it, it’s in your name and it’s your money. The money can’t be stolen by the government. And it's not a scam.?All KiwiSaver providers are licensed by the Financial Markets Authority. Being licensed means they have met minimum standards and are proactively supervised and monitored by the FMA as part of the terms of their licence.
All KiwiSaver providers also have a licensed supervisor. The licensed supervisor is there to ensure the KiwiSaver provider meets its legal obligations.
Has my money actually been lost?
If your KiwiSaver balance has reduced lately, any losses are locked in only if you withdraw your money over that time, or move it to a more conservative fund. Until then, it’s what experts call a ‘paper loss’.
Should I move my money into a more conservative fund?
If you're planning to use your KiwiSaver money in the next few years and thinking about switching due to the ups and downs, it might be a good idea to hold off for a while.
There could well be a bounce back in the market in the short term that will recover some of your losses.
If you plan to use your money in the next few months, for example a first-home deposit, you'll need to consider what feels right to you. Switching now will mean locking in any losses, but you can move forward with some certainty about what your balance will be when it comes time to settle.
You can also choose to stay in the growth fund, if you're in it already, but this could mean things get worse before they get better. And if you're relying on your KiwiSaver balance for the bulk of your deposit, this could affect the amount you are able to borrow for your mortgage.
Avoid changing your fund type because of ups and downs in the market. Think about your investment time frame, and make sure your fund reflects that.
If you are not sure what fund type is right for you, speak to your KiwiSaver provider or a financial adviser.
What is the best fund for my money?
The best fund for your money is based on your investment time frame, and how comfortable you are with investing.
If you’re not planning to use your KiwiSaver money for at least 10 years, a growth fund could be best for you. But if you need your money sooner, a balanced or conservative fund might be better.
Also, if seeing ups and downs in your balance makes you feel nervous and stressed-out, a growth fund might not be suited to you.
If you’re not sure what fund type is right for you, speak to your KiwiSaver provider or a financial adviser.
Can I take money out of my KiwiSaver account?
You can take your money out of KiwiSaver only for a first-home deposit or when you turn 65. You might be able to take your money out of KiwiSaver if you’re suffering from severe financial hardship or severe illness. If this is the case, speak to your KiwiSaver provider, who can help.
You can’t take your money out of KiwiSaver because you want to put it in a bank account.
Should I stop putting money in or reduce my contributions?
It’s best you keep up your same regular KiwiSaver payments, provided you’re still able to financially. Keeping up your same contributions will mean you’ll benefit from the bounce back, when it happens.?If you’re experiencing serious financial hardship or your job is at serious risk, you might look at reducing your KiwiSaver contributions for a while, and putting that extra money into an emergency fund. Speak to your KiwiSaver provider or a financial adviser, who can help you based on your personal situation.
Should I put more money in to take advantage of lower share prices?
You might have heard that ‘shares are on sale’ and to buy up, or contribute to your KiwiSaver account with any spare money you have. This is partly true, but there are some things to consider. Firstly, shares might have not reached their bottom yet. You could buy shares today and have them drop further. No one knows when the bottom is.?
Also, consider your job and income security. Once your money is put into KiwiSaver, it’s hard to get it out again. If your job’s at risk, it might be best to keep contributing the same amount to your KiwiSaver, rather than increasing.
When will the markets pick up?
This is impossible to predict because it depends on many factors, like how long the coronavirus outbreak continues for, and its impact on economies. But what we know from previous market dips is that markets will eventually recover. It might take several years, even 10 years, but they will eventually pick up again.
How can I reduce my stress about my KiwiSaver balance?
Most of us don’t like seeing our KiwiSaver balances drop. Many balances have dropped dramatically, over a short period, and it’s not a nice feeling. It’s a good idea not to check your KiwiSaver balance too often. Once every few months is a good idea. Avoid checking it every day, as it could add to the stress of it.
It could also be a good idea to limit your conversations with others, and reading about market drops. Reading about things like a recession, shares falling, and commentary and predictions can sometimes add to your stress about your investments.
Story by Claire Connell, JUNO
Published 25 March 2020
Pie Funds Management Limited is the issuer of the JUNO KiwiSaver Scheme. You can read our Product Disclosure Statement. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. We recommend you speak with an independent financial adviser. All content is correct at time of publication date.