Make the most of your KiwiSaver 🥝💲
Kia Ora Friend,
Are you making the most out of your KiwiSaver? Are you with the right provider? Are you invested at the correct risk level?
Confused by these questions?
Don't worry! After reading this, you will be crowned a KiwiSaver king - an important step in your financial security.
[Click here for a full blog post]
What is KiwiSaver?
Born in Aotearoa of the year 2007, KiwiSaver (KS) involves making voluntary savings into a separate fund. This can be used for:
Financial hardship - Note: it's better to rely on your emergency fund rather than you KS
Three parties contribute to your KS:
You - as 3%, 4%, 6%, 8%, or %10 of your salary.
Employer (usually at a maximum of 3% of your salary)
Not only are the benefits extra money from your employer and the Government, but also this cash is pooled together to make you more money by investing.
What if I am a Student or Self-employed?
If you are over 18 and under 65 years of age, putting something in is better than nothing into your KS.
For every dollar you put into your KS, the Government will put in 50 cents. That's a 50% guaranteed return!
This is capped at $521.43 per year from the Government. So your contribution will have to be $1042.86 between the 1st July to 30 June next year - that's only $21 per week.
This is a small sacrifice for free money, which can boost your first-home deposit and retirement later on.
How do I set up my KiwiSaver for success?
You to look at two things:
What provider to choose
Risk level will depend on when you want to withdraw your KS. If you are thinking about buying your first home within 2 years, then a conservative fund or low-risk fund is best for you. If you have 20+ years until retirement and are already in your first home, then a growth or high-risk is what you need.
There is also an emotional aspect of risk. How much can you stomach if there is a big drop in your fund? If not very well, then go low risk.
When looking at the KS provider there are three factors to consider:
The most important are management fee and investment mix. Low fees can save you tens of thousands of dollars. The investment mix should be well-diversified and aligned with your morals as well.
Basing a KS provider on returns is similar to betting on the number '8' in roulette, because it came up twice. A KS provider who does well in one year may not repeat their success the next.
How to change KiwiSaver providers?
Changing KiwiSaver providers is as simple as sending an email. Other things you may need are:
Identification such as passport or a New Zealand's driver's license
Proof of address like a power bill
KiwiSaver is an important wealth builder. Having it is good. Making sure you are using it correctly is best. If you want more detail, please read my post on KiwiSaver.
Finally, as a disclaimer, I am not a financial expert or professional. I would advise you to perform your own research or seek a financial professional for any major decisions.
If you found this useful, please spread the word by forwarding this on to family and friends. Thank you for reading.
Mā te wā,
Recent Blog Post
Be a Kiwisaver King: Fifth Step of Financial Security — shivansivakumaran.com Setting up your KiwiSaver is the easiest way to improve your financial security. If you have been following the series so far, you would have:
Kindle Highlight of the Week
We are what we repeatedly do. Excellence, then, is not an act, but a habit.
Stephen R. Covey, The 7 Habits of Highly Effective People
What I'm watching
Course Launch: Machine Learning for Healthcare - #1: Why learn about AI (as a medic) — www.youtube.com
Chris Lovejoy: In this video, I outline a new course on machine learning for healthcare.
What I'm listening to
SPI 431: Is Writing Still a Viable Content Platform? Medium, Copywriting Tips, and More, with Dr. Benjamin Hardy — www.smartpassiveincome.com Pat Flynn: With the rise of podcasting and how prolific video has just seemed to be in the last five to eight years, where does blogging, where does writing, where does tapping away on the keyboard fall into this? That's what that noise was, by the way, tapping on my keyboard.
What I'm reading
The Biology of Belief: Unleashing the Power of Consciousness, Matter and Miracles — www.goodreads.com
by Bruce H. Lipton. The Biology of Belief is a groundbreaking work in the field of New Biology. Author Dr. Bruce Lipton is a former medical school professor and research scientist.
What I'm cooking
When It's Cold Out, Nothing Beats This Beef Stew — www.delish.com Stay warm all winter with this classic Beef Stew made with red wine and beef stock from Delish.com.