After paying your bills, it can feel great to have funds leftover. What an awesome problem to have! But what is the best thing to do with these extra funds? Should you invest in KiwiSaver or property? Or shares, or managed funds?
Let’s break down the options so you can make an informed decision!
KiwiSaver as an Option
KiwiSaver offers awesome benefits for retirement savings. Government contributions of 50 cents for every dollar, up to a maximum of $521 per year, along with employer contributions, are an awesome way for giving a substantial boost to your KiwiSaver account. Not only are they great contributions, but they are automated, meaning your growth can happen “behind-the-scenes” with very little admin needed from you once all set up!
However, if you've already maximised these advantages, you may still want to consider adding extra funds to your KiwiSaver account. A Kiwisaver account offers long-term benefits and by contributing extra, you will be taking good care of your future self. Let’s dive into adding extra funds to your KiwiSaver scheme might be a good idea.
Advantages
Regulation and Safety: KiwiSaver is renowned for its quality regulations and security, ensuring it is a safe investment for all Kiwis. The government is committed to its security with assets exceeding $70 billion. This regulation also means you get to enjoy lower fees compared to other managed funds.
Diversification: KiwiSaver funds are invested globally across a range of various industries, meaning there is plenty of diversity. This diversification is a great thing because it reduces risks compared to investing in a single rental property or specific shares.
Professional Management: Your Kiwisaver funds are managed by seasoned professionals, who offer expertises in creating packages with the best risk-return ratios possible. This is different from the higher risks involved in individual share trading.
Disadvantages
Accessibility: Unlike other savings accounts, KiwiSaver is not easily accessible. Withdrawals are restricted until the individual turns 65 or is purchasing their first home, with exceptions for extreme hardships, medical conditions, or permanent immigration. This lack of flexibility can be a drawback for those who may need seamless and immediate access to their funds in the event of unforeseen circumstances
Decision-Making
Choosing between KiwiSaver and other investment options will depend on your circumstances and goals. If emergency funds are secure and you seek a straightforward investment that grows behind the scenes, KiwiSaver may be ideal. If you want more flexibility, managed funds may suit you better. However, those interested in scaling the property ladder, and those heavily invested in the stock market might prefer to invest their money into property. If you're testing the waters with a small investment, direct shares could be suitable.
Professional Guidance
Chat to our partners at National Capital! To make an informed decision, speak with a financial advisor who can provide educated and expert insights into how each option aligns with your goals. Consider seeking expert advice from National Capital, a KiwiSaver advice firm. They can guide you on the best path based on your unique situation and preferences and help you secure your financial success for today and the future!
