4 Ways You Are Missing Out By Not Sorting Out Your KiwiSaver Fund Today

August 30, 2021

August 30, 2021

We know, sorting your KiwiSaver fund is one of those things you’ll ‘get around to’ - but, really, the longer you wait the more you lose.

Yep. You could be missing out on money by putting it off.

Also, if you are one of the 381,000 Kiwis in a default fund the deadline is looming close. Come December 1st, you will be transferred to a brand new fund - one that you did not choose.

Fortunately, we make it really easy to sort your KiwiSaver fund. So easy it takes less than five minutes. If you haven’t already, there is no better time than now to just do it.

Here are four compelling reasons to sort your KiwiSaver fund today.

1. Because compound interest

You’re probably familiar with the concept of interest - if you have a savings account, it earns a certain percentage of interest every month. So, the more money you have in there, the more interest you earn.

But things get way more exciting when your interest compounds. This means that whatever interest you earn is added back into your original amount, and the whole lot combined earns more interest. Your interest earns interest. Your money makes more money, without you doing a thing (except investing in the right fund - more on that later). Seriously, Einstein called compound interest the eighth wonder of the world.

Here’s an example to drive home how much difference compound interest makes:

You’re 20 years old. You start saving $10 a week. When you’re 25, without any interest, you have $2600. With compound interest at 2.5%, you’ll have $2770.

But what if you keep saving $10 a week?

When you’re 40, you’d have $13,450 vs $10,400.

When you’re 60, you’d have $35,480 vs $20,800.

See how compound interest really plays in your favour the earlier you start? And that’s just at 2.5% interest.

If someone said to you that simply by putting aside some money now it could potentially multiply exponentially over the coming years, would you put it off? We didn’t think so. Your KiwiSaver fund compounds interest - so get it sorted now.

2. Because you could be missing out on better returns on your investment

We mentioned investing in the right KiwiSaver fund. Doing this when you’re in your 20s can potentially mean a six-figure difference later in life.

It all depends on what you want to use your KiwiSaver for, and when. Do you expect to use it as a deposit for your first home in your 30s, or for retirement in your 60s? Maybe both? It’s critical to get in the right fund ASAP in order to get the most out of your KiwiSaver and realise all of your goals.

KiwiSaver funds are separated into categories based on risk level. Lower risk funds tend to see slow and steady growth, while higher-risk funds will fluctuate much more. This means that in the long term, higher risk funds like growth funds stand to earn more, but you will also see your balance decrease along the way. Not ideal if you are planning on buying a house soon and relying on your KiwiSaver fund for a deposit!

On the other end of the spectrum, lower risk funds maintain steady growth, so you are unlikely to see significant drops in your balance, giving you greater security that you’ll have the money you’re counting on when you need it.

So, the younger you are when you sort your KiwiSaver, the better off you will be to realise all of your goals for your KiwiSaver fund.

3. Because your money can be doing good things in the world

Most of us have good intentions with the way we live our life - we recycle, support local businesses, avoid plastic - yet not all KiwiSaver funds support those same ideals. In fact, some are invested in things that some Kiwis find unacceptable, like military weapons, animal testing, GMOs, and fossil fuels. That’s just to name a few.

Then there are other funds that are committed to ethical investing. But some of these funds can’t guarantee that their standards are met. Plus, ethics are really personal. What someone might be ok with might be unacceptable to the next person.

At BetterSaver, we believe everyone should have the knowledge and information needed to choose what their money supports. We do all of the hard work behind the scenes, fully investigating the data to find out where invested money actually goes. As part of our Fund Finder quiz, we ask about your ethics and values so that we can match you with a fund that lines up.

The sooner you start looking at where your money is going, the sooner you can be using it to support what you want to support.

4. Because if you do it now, you can refer your friends and earn more

Right now BetterSaver has a refer-a-friend program where for every friend you refer who signs up, we put $50 in your KiwiSaver account and $50 in your friend’s account. The more friends who sign up, the more money in your KiwiSaver. Plus, they get all the benefits of sorting their KiwiSaver and $50 too. Win-win!

We have another reason why you should just do it - it only takes about five minutes.

Seriously, what are you waiting for? Take the Fund Finder quiz and switch your KiwiSaver fund to one that best aligns with your goals, timeline, and values.

Get expert KiwiSaver advice.


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