Don’t panic if your KiwiSaver balance goes down

Your KiwiSaver money is invested in the financial markets, so it can go up and down. If your balance has dipped, should you worry?

Try not to panic

Sometimes external events can affect financial markets. Events could be as different as a natural disaster, a decision by a new country leader, or a reaction to the recent coronavirus outbreak. When events like this affect financial markets, it’s best not to panic. Your KiwiSaver balance might dip, but try to stay calm. 

In the past, markets have usually recovered fairly quickly from these types of events. These events aren’t usually directly related to the companies that you have shares in, which are probably still good businesses. 

KiwiSaver is a long-term investment 

Your KiwiSaver money is often invested in shares on the share market, so it is affected by market volatility (ups and downs). When the market rises and falls, your balance can increase or decrease. When it goes up, it’s great. But sometimes it falls, gently and gradually, or sometimes sharply. When your balance dips, it’s usually not a cause for concern. Over the long term, your balance is expected to grow. 

Should I change my fund? 

It’s important your KiwiSaver money is in the right fund. Your fund type (for example, growth, balanced, or conservative) should be right for your risk level. Your risk level is decided by how long you will have your money invested in KiwiSaver, and how comfortable you are with investing. 

Avoid making snap decisions on your fund type based on external factors, like a wobble in the financial markets. A strong investment strategy is ‘time in the market’, rather than timing the market. 

But if watching your money go up and down really worries you, there are options. You can try to get used to the ups and downs. Most people find the longer they’ve been investing, the more comfortable they get. Or you might not be in the right fund for your risk level.   

What does your KiwiSaver provider do when there’s market volatility?

If your KiwiSaver provider is an active manager (meaning real humans are making active decisions about your money), the investment team can increase the cash levels of the fund. That means less of your money is invested in the financial markets, so you won’t get such extreme ups and downs. JUNO’s an active manager, and increasing cash levels is just one of many ways an active manager can keep your hard-earned money safer. The downside, though, is your returns sometimes might not be as high, because there’s not the same level of ‘bounce back’ when the market picks up again.

Still confused? 

If you’re worried, or confused about your fund type, give your KiwiSaver provider a call. They’re there to help you understand, and give you information about your account and your balance.

Published March 2020

Story by Claire Connell, JUNO

We aim to make investment with KiwiSaver easy to understand. To help us make this article reader friendly, we used The Write Plain Language Standard.

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.