KiwiSaver myths - busted!

23 July 2020

KiwiSaver has been around for well over a decade, but there are still some common misunderstandings about how it works. When it comes to getting the best from your KiwiSaver, knowledge is key. So here are some of the top KiwiSaver myths – busted.

Myth 1

Just like a savings account, my KiwiSaver balance should always go up, never down


KiwiSaver is an investment scheme, not a savings account. Your money doesn’t just sit in the bank and earn interest; it’s invested in different types of ‘assets’ such as shares, bonds and property.

The return you get depends on how those investments perform. That’s why your balance can go both up and down. Fluctuations in your KiwiSaver balance can be stressful, especially if you’re not used to them, but they are a natural part of investing. When investment markets recover after a rocky period, KiwiSaver balances should reflect that. It’s important to remember that for most people, KiwiSaver is a long-term investment. And over the long term, history shows that investing in things like shares, bonds and property delivers better returns than savings accounts over the long term.

Key lesson

Don’t worry about short-term blips. Your KiwiSaver balance can go down as well as up but it’s the long-term trend that matters.

Myth 2

It doesn’t matter what fund I choose – they’re all the same


Most providers offer a range of different funds to invest in. They’re each designed with different risk and return profiles and it’s important to choose the right fund for you.

For example, at ANZ Investments our funds range from a growth fund which aims to deliver higher returns over the long term but may have higher fluctuations in value, to more conservative funds, which have lower risk but potentially lower returns.

The right fund for you depends on your situation. For example, those who have a long time to go until retirement may benefit from a growth fund because it aims to deliver higher returns over the long term – and the inevitable ups and downs should balance themselves out over that period. Conversely, those who are closer to retirement or are planning to use their KiwiSaver savings to help buy their first home in the near future may benefit from investing in a more conservative fund because it gives them greater certainty about how much they’ll have when they need to withdraw funds.

Or, you can choose our Lifetimes option, where your savings are automatically invested in one of our funds based on your age. As you reach a different age range, your savings are automatically moved to a different fund with a more appropriate level of risk and expected return for an average person of your age.

It can be hard choosing, so if you’d like some help you can take our quick Risk Profile Questionnaire or get free advice from one of our ANZ Investment Advisers.

Key lesson

Choosing the right KiwiSaver fund can make a big difference to the amount you have when you need to access your savings.

Myth 3

If my balance drops, it’s a good idea to switch funds or stop contributing


Like anything else, it depends on your situation. But it’s important to be aware that switching funds or stopping your contributions can cost you a lot of money.

Your KiwiSaver account is an investment, so your balance can go down as well as up (see Myth 2). If you’re in a growth fund and the balance goes down (as happened during the COVID-19 pandemic), it can be tempting to switch to a conservative fund that doesn’t fluctuate so much. But that essentially ‘locks in’ your loss and means that when the market recovers, you may miss out on the higher returns expected from a growth fund. Stopping your contributions can also cost you money because when your fund price is lower you’re actually buying more units in it for every dollar you contribute – in other words, you’re buying the same investment at a sale price! If you stop your contributions, you risk missing out on the benefits when your fund price goes back up.

Switching funds can make sense if you’re in a fund that’s not appropriate for your needs – see Myth 2 for more on this. But if you’re in the right fund for your situation, don’t panic if your balance drops – it’s normal, and you’ll benefit when markets recover.


Key lesson

If your KiwiSaver balance drops, don’t make hasty decisions – remember it’s all part of investing. Any changes you make should be based on your investment goals, timeframes and your tolerance for risk.

Myth 4

Getting advice on KiwiSaver is too hard / too expensive


There’s plenty of advice available that won’t cost you a cent. There are also a number of digital tools available to help you get the most from your investment.

At ANZ Investments, for example, our Investment Advisers can help with free advice tailored to your situation, whether you’re just starting out or an experienced investor. They can help you gain clarity on your financial goals and timeframes, provide a reality check, help you understand your attitude to investment risk, and recommend options.

We also provide easy to use calculators and tools. You can use our KiwiSaver account calculator to see if you’re on track for your retirement goals (and what you can do if you’re not). You can also use our Risk Profile Questionnaire to help you understand your attitude to investment risk, which is a key factor in deciding where to invest your money.


Key lesson

When it comes to investing, knowledge is power – so take advantage of the free financial advice, tools and resources available.

Important information

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.