Which KiwiSaver Fund should you be in?: Demystifying KiwiSaver funds

At Super-Advice we are about all things financial, but more importantly, helping people understand so they can get ahead financially.

Today we explore the major Kiwi Saver Fund types and provide character examples to help you determine which fund aligns with your investment preferences and goals. And if you’re not sure , please come through and have a talk to us and we can help you out.

Conservative Fund

The character of the Conservative Fund is like a wise and cautious saver who prefers stability and prioritizes capital preservation over higher returns. Now, capital preservation means. I hate watching my money shrink at all – ever! Which can happen with investments.

They will prefer stability over those higher returns and they value security of their investments and they are what we would call risk averse, which is fine, it just means they’re not willing to risk their stuff.

Key features of a conservative fund.

It will predominantly invest in low risk assets such as cash or fixed interests. Think term deposits, it will typically be suited for individuals with shorter investment timelines or time horizons, and that have low tolerance for risk, it just means if you need your money soon you should use a conservative fund. The fund has lower potential for significant growth, so that’s a downside. It does offer greater stability, reduced volatility and a smoother ride with less returns at the end.

Balanced Fund

The Balanced fund embodies the Careful Planner who seeks a balanced approach to investing, so they like the combination of both growth and stability, and they’re comfortable with moderate fluctuations and returns. Nothing too hectic. Key features in a balanced fund is it invests in a mix of both growth assets like shares and income assets like bonds.

It’s suitable for individuals with a medium time horizon, so they don’t need their money for at least, let’s say seven years and they’ve got an okay appetite for risk. So they’re okay with a little bit of risk. It doesn’t freak them out too much. The fund aims for a balance between long-term growth and some stability.

So it’s gonna give you a higher return than the conservative, but it’s gonna be a ‘wavy’ ride up there.

Growth Fund

The growth fund represents an ambitious go-getter who seeks higher returns and is willing to tolerate higher levels of risk. They value long-term growth and are comfortable with market fluctuations.
So it’s gonna be a bumpy ride up, but it’s gonna get up there. Key features of a growth fund is it will primarily invest in growth assets. That means it’s mainly shares in the fund and less of the low risk stuff like bonds and cash.

It is suited for individuals with a longer time horizon and a high tolerance for risk. So,younger people. This is best for younger people because they’ve got a lot of time in front of them. They can handle the ups and downs.

Aggressive Fund

Now this embodies a real risk-seeking adventurer who is comfortable with loads and loads of fluctuation, and they aim to get the highest potential returns. So these people are willing to take on substantial risk in the pursuit of long-term growth. So this is perfect for young people.

If you can forget you’ve got investments, it’s the ultimate. They’ll just do their thing and if they’re doing this and that, it doesn’t matter. Because you’re not looking at it and you’re just gonna get the big return. Key features, it focuses on high risk growth assets. So the fund is a whole portfolio usually just full of shares.

It’s designed for individuals with the longest investment horizon and really high tolerances for risk. And this has the potential for significant long-term growth, but it comes with heightened volatility. So if you’re young and you never check your investments – This is you all day long!!

That’s a wrap

It’s obvious that choosing the right Kiwi Saver Fund is a personal decision. It’s based on your individual circumstances and investment preferences. And if you don’t have any of that, come and talk to us and we’ll just make sure it’s set up for you the right way. And we’re available to be there to ask questions and learn from You know, it’s really handy to understand about investing.

Most people have, or they should have KiwiSaver. It’s a perfect, perfect investment that you can use to learn how investing works. And if you understand investing – you’ll do really well in life. I hope that’s helpful.

If you need any financial help or advice please get in touch with us at Super-Advice.

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