Spending can be just another of those temptations that we find difficult to avoid. After all, if we are young with good income it is easy to overlook the liabilities such as family, education or mortgage that tend to creep up later without too much notice!
The advent of KiwiSaver however has gone a long way towards making the job of saving somewhat easier. Whilst we might change jobs on a regular basis, that KiwiSaver plan just follows along with us and the fund keeps growing. And, if we’re contributing sufficiently (often with the help of our employer), the Government pays a significant tax credit to our KiwiSaver account at the start of its financial year from 1 July.
As mortgage advisers we are very much aware that much of our work is with first home buyers who are able to use the first home buyer withdrawal facility and homestart grant, to provide the deposit for their first home.
But if it sounds too good to be true – are there some things we need to watch out for?
The answer to this lays very much in the advice that we are able to get. The investment option that we choose can have a significant effect on the growth of our savings. Generally speaking, if we will have a need to use the funds in the shorter term for something such as a first home deposit, then we might need to consider an investment choice that is more conservative and so will have a lower investment return but also lower volatility.
If our funds are for the longer term such as for our retirement, then we may need to invest in investment options that are more aggressive and so more volatile along the way. We may suffer the occasional loss with more aggressive investment choices, but the extra time we have to retirement, gives the investment the time to recover and get ahead again.
So, where do we get the chance to consider our options and plan for the best savings outcome?
It is possibly too much to expect that our employer who is required to ensure we are enrolled in a KiwiSaver plan, is able to give the advice we need.
At Thompson McNeill we are happy to talk to both employers or their employees about KiwiSaver and guide them through the process.
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