Why is my KiwiSaver balance going down?
We are dealing with a crisis for which there is no precedent in modern history. Since the onset of the Covid-19 pandemic, every day brings some new extraordinary occurrence or stat. The future is clouded by uncertainty.
However, we would do well to remember that being hit by a ‘crisis without precedent’ is itself not unprecedented. The world has been here before. The Great War was unprecedented, as was the Great Depression of the 1930s, as was the GFC in more recent times.
All these crises sent finance markets into a tailspin for a time, as this one is doing. And just as they began, these crises also ended one day.
It may be a time to review your holdings and if you wish to speak to one of our Lifestages Advisers please feel free to email us with your contact details at firstname.lastname@example.org and we will be in contact.
What can I do about my KiwiSaver balance going down?
Our investment is for the long-term investment. These short-term events should not change your long-term investment strategy, such as your choice of fund. If you’re in the correct fund for your goals and investment timeframe, you don’t need to do anything. Doing nothing at a time like this can seem unnatural, but it’s important to understand that timing markets is hard, including trying to time when to exit and when to get back in. Selling or switching funds may simply realise losses, particularly when markets have already dropped, and this shuts off any chance of benefitting when markets eventually rebound.
Of course, ultimately it is your choice which fund you choose to invest in. If you understand the risks with trying to time the market but you are uncomfortable with these market movements and seeing your balance fall, you can choose to invest in a conservative or cash fund.
What do I need to keep in mind when thinking about my KiwiSaver during these volatile times?
Now is a good time to think about why you’re invested. Do you intend to use your savings in the short term, such as in a year or two to help you buy a home? Or will it fund your retirement in a few decades? The right fund for you will depend on the timeframe of your goal.
What are you doing to manage my KiwiSaver during this time?
Reacting to the short-term volatility is not part of the investment philosophy that Lifestages uses for our investments and asset allocation process.
We make investment decisions based on medium to long term expectations. We believe that decisions made with a long-term horizon will in the long term outperform decisions that are taken with a short-term view.
What will happen next in sharemarkets during this time?
Nobody knows what will happen next and new developments are unfolding daily. Sharemarkets respond both positively and negatively to the developments that are happening.
It's important to remember that while uncertainty like this is never comfortable, it’s more important than ever to take a step back and consider your long-term goals and investment needs when making any investment decisions.
We do not recommend changing well-planned, long-term investment strategies because of the virus, or the current sharemarket volatility. Please refer to the Lifestages home page for some very good articles on this.
Can I stop my KiwiSaver contributions?
If you're employed and have been enrolled in KiwiSaver for 12 months or more, you can apply for a savings suspension of between three months and one year. To apply for a savings suspension, please complete the 'KS6' application form, available at https://www.ird.govt.nz/kiwisaver and send it to Inland Revenue.
If you're self-employed or not employed, you can stop contributing at any time.
Can I access my KiwiSaver funds early?
You may be able to make a withdrawal from your KiwiSaver account if you are experiencing significant financial hardship. Find the full eligibility and application for KiwiSaver hardship withdrawal here.