Craigs Investment Partners, 4 July 2018

That’s the possible difference a 1.6% better return could make to your KiwiSaver investment*. Find out how Sarah could do that in the following example.

1.6% sounds small but over time can turn in to hundreds of thousands of dollars. Check you’re in the right investment so you don’t miss out.


Take Sarah and James. At 25, they both join KiwiSaver. Sarah selects a growth fund and James doesn’t pick one, so is placed in a default fund – which is conservative. At 65 when they retire, although Sarah’s fund has only performed 1.6% p.a. better, she could have $300,000 more in her savings*.

Sarah & James comparison graph

There are simple steps you can take to find out if you need to move. First, find out how much risk you can manage. Next, check your risk level lines up with your existing fund – if not, talk with an investment specialist to find the right fit for you.

Step 1: Find out how much risk you can take on in your KiwiSaver investment

Discovering the level of risk you can tolerate is the best way to find the right KiwiSaver investment for you.

Your risk level is guided by two key factors. Firstly, your ability to take on risk which is determined by your age and how long you’re planning to invest for. And secondly, your tolerance or attitude to risk which is how you feel about the possible rise and fall in the value of your KiwiSaver balance.

These characteristics are personal to you; they form your risk profile. Which is why it’s not always wise to pick an investment based on what your friends, parents or colleagues are doing. Think of how long you’re planning to have your KiwiSaver ticking along. Take Rob for example, in the following case study.

Case Study: Rob*

Current fund: Conservative

Current value: $58,000

Rob and his portfolio

Rob’s well away from retirement at 32; he still has 30+ years of work on the horizon. Given he’s going to keep his KiwiSaver invested throughout those years, a growth investment is more likely his match. The only element he’s yet to consider is how much risk he can cope with. Can he handle seeing the value potentially bounce up and down in the short-term, for a potential higher reward in the long-term? Or would he feel more content seeing more of an ebb and flow, slowly edging upward?

Risk is quite an abstract idea and can be hard to assess on your own – there’s a Risk Profiler on the Craigs Investment Partners website which can help:

Rob takes a few minutes to run through the Risk Profiler online, and finds he’s more suited to a growth investment portfolio given his long-term view. He can handle a bit of turbulence along the way to make that happen. Rob books a free consultation with an investment adviser at Craigs to make the final call. They decide on an investment portfolio with a growth fund as his cornerstone investment. This immediately gives Rob a diversified portfolio – spreading any risk across a range of stocks and sectors. He complements this with a number of NZ, Australian and global shares that he and his adviser see opportunities in.

Step 2: Make sure the fund you’re in suits you

Rob was placed in a default KiwiSaver fund, as he didn’t make a choice when he first got set up. This isn’t uncommon – 16.4% of Kiwis are in default funds[1]. But it’s not always ideal, as the default fund is conservative and not suitable for everyone’s personal situation. Conservative is generally for those with a short-term investing horizon – perhaps they’re retiring in a few years or pulling the money out for a first home.

TIf you’re going to be investing for the next 10 or more years like Rob, you’re considered a long-term investor. Long-term investors have time to sit through the inevitable market fluctuations that happen from time to time.

On this basis, when you look at KiwiSaver as a whole, you would expect to see a focus on growth assets. According to the latest Morningstar KiwiSaver investment survey, only 49% of KiwiSaver funds are invested in growth assets, with 51% in income assets (more conservative investments). There seems to be a mismatch between the age profile of KiwiSaver members and what they are investing in.

Growth vs Income graph

This is a general perspective and it won't be right for everybody. What mix of assets is best for a particular KiwiSaver member depends on their particular situation – their risk tolerance, the term of their investment, and their investment objectives.

Step 3: If you’re not in the right fund, it’s easy to move

Do you think your KiwiSaver is a poor match? It’s easy to move to one that better suits you. Simply find a fund which lines up with your risk profile and apply.

With Craigs Investment Partners, not only can you invest in your chosen fund, you can also create your own KiwiSaver investment portfolio, as Rob did. This can be specifically designed to meet your personal situation.

If you’d like help with this, you can speak with one of Craigs’ investment advisers.