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KiwiSaver vs investment funds

In this article, we look at both the similarities and differences between KiwiSaver and investment funds, and how they can work together to help you achieve your investment goals.

KiwiSaver and investment funds (also called ‘managed funds’) are very similar. In fact, KiwiSaver funds are actually a type of managed fund. But KiwiSaver was designed specifically to help you save for your retirement, so it has some special benefits – and also some limitations – that investment funds don’t have.

Similarities

With both KiwiSaver and investment funds, your money is pooled with other investors’ money and invested in a range of assets including shares, bonds and listed property, depending on the fund you choose. You pay an annual fund charge to the fund manager, which covers all the work and expenses involved in managing the fund your money is invested in.

Both KiwiSaver and investment funds typically offer a choice of funds, each with a different mix of investments depending on your attitude to risk, investment timeframes and financial goals. Returns for both KiwiSaver and investment funds can go up and down depending on the performance of your fund.

 

Differences

There are three main areas of difference between KiwiSaver and investment funds:

  • Contributions
  • Access to your money
  • Buying your first home

 

Contributions

With both KiwiSaver and investment funds, you can make regular and lump sum contributions anytime. However with KiwiSaver, you could also benefit from the employer and Government contributions.

  • Employer contributions:
    if you're employed and contributing to KiwiSaver from your pay, your employer is generally required to contribute at least 3% of your before tax-pay. Read about Employer contributions.
  • Government contributions:
    if you're eligible, the Government will also contribute 50 cents for every dollar you contribute to your KiwiSaver account, up to $521.43 a year. Read about Government contributions.

Access to your money

With investment funds, you can request to withdraw some or all of your money at any time—.

With KiwiSaver, your money is generally locked in until you turn 65, unless:

  • You're experiencing significant financial hardship, 
  • You're emigrating permanently,
  • You have a serious illness, or
  • You're using your KiwiSaver savings to buy your first home.
Early withdrawals from KiwiSaver

Buying your first home with KiwiSaver

If you're eligible, you can use your KiwiSaver savings to either buy your first home or buy land to build your first home on. If you've been making regular KiwiSaver contributions for at least three years, you may also be eligible for a First Home Grant from Kāinga Ora.

Investment funds aren't locked in, so you're able to use your investment towards buying your first home too, as well as any other goals.

Buying your first home with KiwiSaver

How can they help you achieve your financial goals?

While they are similar in many ways, KiwiSaver and investment funds have their own special benefits and features – so they can work together to help you achieve your goals.

For example, KiwiSaver offers benefits such as employer and Government contributions, but your money is generally locked in until age 65. If you have additional funds to invest, you may want to consider putting them in an investment fund which offers you access to your money whenever you need it, giving you greater flexibility.

Summary of key features

OneAnswer KiwiSaver Scheme

OneAnswer investment funds

Actively managed by our Investment Management team

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Diversified (access to a wide range of investments)

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Choice of funds to invest in

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Add to your investment anytime

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✓

Access your money anytime—

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✓

Employer and Government contributions

✓

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First home benefits

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Tailored investment advice

The future is bright when you feel confident about your investment choices. If you need help choosing the right investment option for you, talk to your financial adviser. If you don’t have a financial adviser, we can put you in touch with an ANZ Investment Adviser on 0800 736 034. See ANZ’s financial advice provider disclosure.

Investment advice

You might be interested in

How KiwiSaver works

Your starting guide to KiwiSaver – find out how KiwiSaver works and why the ANZ KiwiSaver Scheme is a great choice. 

How KiwiSaver works

OneAnswer investment funds

With OneAnswer investment funds, you can invest in a wide range of local and international markets, with the comfort of knowing your money is professionally managed by a team of experts. It’s a flexible and easy way to invest, whatever your financial goals may be.

OneAnswer investment funds

Complementing KiwiSaver with investment funds

It’s not one or the other – find out how they can work together to help you achieve your goals.

Buying your first home with KiwiSaver

Important information

ANZ New Zealand Investments Limited is the issuer and manager of the OneAnswer KiwiSaver Scheme, the OneAnswer Multi-Asset-Class Funds and the OneAnswer Single-Asset-Class Funds. Important information is available under terms & conditions. Download the guide and product disclosure statement.

Our financial advice provider statement has some important information you should know about ANZ and our financial advice services. Please take the time to read it.