At Super-Advice we are about all things financial, but more importantly, helping people understand so they can get ahead financially.
In today’s blog post we answer the question, should you switch your KiwiSaver to a conservative fund?
My KiwiSaver balances shrinking. Should I switch into a conservative fund?
Those that should think about switching to a conservative fund are people who have an absolute need to spend that money urgently.
Those people should consider it, but before they make a final decision, they should speak to a financial adviser because there are implications.
And you’ll see that when we explain the people that shouldn’t, which is most of you.
When you shouldn’t switch
Most of you should not switch your Kiwi savers to a conservative fund because a couple of things will happen.
Losing your accounts gains
If you move from a growth fund or a balanced fund or a high growth fund to a conservative fund, you are switching from one fund to another.
So you’re closing that fund like an account and opening up another. And when you do that, you are cementing the loss.
Cementing the loss
If you’ve gone from $100,000 and you’ve noticed your KiwiSaver balance shrink to $85,0000, and then you close the high growth fund and open a conservative fund, you have locked in your loss.
Missing out on growth
And the reason why it’s a bad thing is that you have quite possibly missed out on the opportunity to grow your KiwiSaver quickly back up again when the market recovers.
What we advise
If you have five years or more in your KiwiSaver left before you can access it, if you’ve got no plans to buy a house in the very immediate future, just leave it where it is and when markets recover so will your KiwiSaver.
That’s a wrap
So what do you think? What do you think about your KiwiSaver?
If you need any financial help or advice please get in touch with us at Super-Advice.
