Many clients planning to utilise some of the investment in KiwiSaver to buy their first home have seen, over last few months, a drastic reduction in the KiwiSaver investment balances. This has created a lot of attention amongst first home buyers. The purpose of this communication is to quickly and briefly explain what is happening and what may be the best course of action in the current situation.
What are the causes?
KiwiSaver investment is not a day-to-day savings bank account. KiwiSaver money is invested in funds which, in turn, are invested in a combination of shares, property, bonds and cash. This means, your savings are influenced by movements in global share (and other) markets.
Currently the investment markets worldwide are experiencing a roller coaster ride (meaning they are fluctuating wildly) due to the impact of Covid 19 on the world economy. When the markets rise and fall (move up and down), the value of KiwiSaver balance can increase or decrease – either gradually, or sometimes sharply and this is exactly what is happening today.
What is the recommended way ahead?
We strongly urge you do not react in panic but undertake some introspection by asking yourself some fundamental questions like
Why am I in KiwiSaver?
How soon do I need the KiwiSaver money?
Have my goals of investing in KiwiSaver changed?
It is a good idea to review the purpose of investing in KiwiSaver with your authorised financial adviser. Key is to act in accordance with one’s investment goals and not according to the ups and downs of the markets.
It is likely that, to meet the threshold for the initial deposit for your house, you may depend on a specific amount forming part of the KiwiSaver investment. In this instance it may be the time to act NOW and to request access to your funds.
However, if you are unsure about when you are likely to buy your first home (for which you are depending on some of the money in the KiwiSaver investment) then it may be a good idea to revisit the type of fund or funds you are currently invested in with the help of an authorised financial adviser authorised to give personalised advice on KiwiSaver.
Get in touch with Mortgage Express and one of our advisers will assist you in making a decision about your KiwiSaver investment.
The information contained in this article was prepared by Mortgage Express Limited. While every care has been taken to supply accurate information, errors and omissions may occur. Accordingly, Mortgage Express Limited accepts no responsibility for any loss caused as a result of any person relying on the information supplied in this article.
This article does not constitute regulated financial advice to retail clients. It may not be relevant to individual circumstances. Nothing in this article is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this article.
A disclosure statement is available on request and free of charge.