Does your KiwiSaver match you current circumstances?

If you have applied the professional approach to your personal situation that we have detailed in these articles, you would have looked at your income and expenses and worked out how to budget, and identified if you need to spend less.

You would have set up insurance to protect your sources of income and your assets.

And now we will look at options for any surplus you have week to week.

The first place to start is to contribute into KiwiSaver. Whether you own your house or are saving towards one, KiwiSaver is a pretty solid way to get things under way.

KiwiSaver is a saving scheme which is basically a managed fund that has some special characteristics but should form a part of everyone’s saving strategy.

Firstly, your contribution should at least match what your employer puts in, normally 3% but sometimes more. If you put in up to $1042 per year, the government will give you a credit of 50c for every dollar up to this amount.

Although your funds are locked into retirement age (presently age 65), you can withdraw earlier for a few reasons, the main one being purchasing your first home.

It is important to get your strategy right for KiwiSaver the main question being what is your timeframe before needing it, and then how much risk you are willing to take to give yourself the best chance of a long term return.

The last important question is whether your provider is doing a good job for you and matching your outcomes with their own strategy. This includes of course performance and fees, but also such strategies as to being active or passive and approaches to socially responsible companies.

As independent advisors we can of course assist here to match you with a provider that is best suited to your personal circumstance.

Your KiwiSaver funds are held in a trust with a whole lot of other people and then a manager (provider) buys assets such as shares and property with the pooled funds. The diversification is so large that it is unlikely that you can lose all your money, the funds can go up and down in value but will go up over time. The diversification and pooling allow access to more assets than you could normally access yourself.

A well run, cost effective KiwiSaver and matching your employers contributions is a pretty fail safe way of building up some savings.