Your fear of losing money on your KiwiSaver investment is normal.

The markets are erratic. KiwiSaver balances are riding a blip. Fearing losing money when you can see your investment declining is normal. The best thing you can do now is remain calm and stay the course. KiwiSaver is not a traditional savings account. It is in fact, your investment account (yes, you have a portfolio). More importantly, it is a long-term investment and a long-game.

With any investments, there is a level of risk.

If you hyperventilated after seeing the hit your KiwiSaver balance has taken recently, it may have brought back some unpleasant memories of a 2020 Covid-related KiwiSaver slump. I checked my KiwiSaver again last week. Bracing myself, with clenched teeth. Just like in 2020. This time around, I’ll do the same with the funds as I did in 2020. Nothing.  

Depending on who your KiwiSaver is with (and I’ll assume we look after it for you in this instance) your fund managers are ‘active’ – meaning they actually like it when there is a dip like this because they buy shares (etc.) on the cheap. And, when the markets adjust again (just as in 2020), your balance will be looking even better than before.

Active fund managers have the expertise to use this market volatility to make adjustments they believe will add value to all of us over time. If your KiwiSaver balance has reduced lately, any losses are only locked in.

Stay the course.

It is interesting and topical to dive into the providers' investment breakdown which lists the companies they invest in. Companies like Meta, Microsoft, Netflix (value down 36% in the last month), Blackrock Inc, Mercedes Benz, Amazon (down 13.5% since December) AstraZeneca Plc (yep, the vaccine guys), Wal-Mart, Apple etc - make up a fraction of the list.  

Our investments are spread across international equities, fixed income (term deposits), Property & Infrastructure and Shares. Lots of shares. And when there’s things like War and Covid, share markets everywhere take a hit.  

More and more we see the socially responsible / ethical investing role playing a bigger part of Kiwi’s KiwiSaver decision. That has been starkly apparent, on a Global level recently, in companies pulling their investments in Russia. One of the companies we work with has it on their front page – telling you how they’re standing by the Ukrainian people and removing Russian investments (however small).  

The governments annual member tax credits and the opportunity to buy investments that have fallen in value recently, is a flip side to the ‘bad state of things at the moment’. You may consider upping your contributions at this time.  

One of the most successful investors, Warren Buffet, swears by this approach. You’re likely invested with him and his Company, Berkshire Hathaway (Google it).  

You’re doing great, and things will be as they are. As this is a long term investment, so stay the course. No knee jerk reactions with those funds, unless you are approaching needing them for your first home or retirement. In that case, talk to us first.

Simon :)

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About Simon

Hi, I’m Simon a Financial Advisor here at Velocity Financial. I enjoy working with my clients to help demystify all the Mortgage, Insurance and KiwiSaver fine print, and help get them to where they want to be. I am dedicated, thorough and offer professional advice that works for you. I like to help people on their journey and be a trusted person to guide them through really important events in their lives such as the home buying process. I help my clients collaborate with valuers, builders, lawyers and real estate agents to ensure a seamless experience. That satisfaction of reaching the goal with the least amount of stress for my clients is hugely rewarding. I navigate unique scenarios and tailor lending solutions for individual circumstances to save money and time. As a proud father of two and avid supporter of all my children’s endeavours, I know just how precious that time is. On the weekends you’ll also find me mountain biking, surfing, or checking out NZ’s great walks.

Disclaimer: Simon O’Neill (FSP534466) is a Financial Adviser with Velocity Financial (FSP95466). No investment decision should be taken based on the information in this blog alone. Please see Simon’s disclosure statement on our website.

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