A 'Great' KiwiSaver?

I recently had a ‘barbecue conversation’ with someone who said their KiwiSaver had grown by $7,000 in the past year and “Wasn’t that great?” On the surface it may seem so, but is it?

Being more focused on the steaks and sausages we didn’t get into the nuts and bolts of this, but there is a basic concept here that is worth exploring.

The key here is how much of that growth came simply from the obligatory contributions into their KiwiSaver and how much came from the investment return from the provider.

If the obligatory contributions from themselves, their employer and the Government contribution accounted for $6,000 of that $7,000, and the fund return made up the other $1,000, then was that great? No matter where their KiwiSaver was held, their fund would have grown by $6,000 regardless.

On the other hand, if obligatory contributions made up $3,000 of that $7,000, and the fund return accounted for the other $4,000, then that is looking great.

The key here is being aware of the investment return on your KiwiSaver. This is something you can track if your provider includes a breakdown of your KiwiSaver in their communications with you.

As you can see in the example here the analysis of this KiwiSaver fund is quick and easy to do. By regularly taking note of the orange ‘Investment earnings’ you will be able to monitor the investment return your KiwiSaver is getting and decide for yourself if it really is great or not.

If you are a little bit clever you can even track it over time using something like an excel spreadsheet. Then you’ll know if you should truly be happy or mad!

If you would like to know more about how KiwiSaver works and how you can monitor it for yourself, feel free to message us to book a 100% free 30 minute KiwiSaver Tutorial.