Are you in the best KiwiSaver fund - and what does that question even mean?
Every provider will tell you they're the best, and there are many marketing tricks to look like a world beater. But how do you know?
Providers choose different timeframes for comparisons, says Binu Paul, founder of comparison service SavvyKiwi. So different funds can all claim to be the highest performing.
A better comparison is to go back 10 years, says Brian Gaynor of Milford Asset Management.
Of the 95 funds in October 2007, the top performers over 10 years made an average of 5.54 per cent-6.05 per cent, says Paul. But don't jump to invest in them yet. Simple tables don't make these funds the "best" for your individual circumstances. For a 33-year-old homeowner, for example, any conservative fund is almost certainly wrong because at that age your money should almost certainly be invested for growth.
Other issues to consider:
Watch those fees
Fees are a hot issue thanks to the launch of not-for-profit Simplicity KiwiSaver. Annual fees on an $11,500 balance range from $43-$180 for conservative funds, according to Canstar, and $104-$270 for growth.
Over a lifetime this adds up to tens of thousands of dollars . There is an argument that performance fees, for example, mean your provider is incentivised to do well. Yet AUT University's Dr Ayesha Scott, says no fund outperforms in the long run.
"KiwiSaver fees are one area where it's not necessarily true that 'you get what you pay for'. Higher fees don't necessarily mean higher returns or better service," Scott says.
Don't chase last year's winner
One year's performance tells you nothing about your choice of KiwiSaver. It's the future long-term winner you want. Award winning managers may move on, and markets go through good and bad times.
One top-performing fund currently only invests in New Zealand shares. There is a lot of noise the NZX is in for harder times and its 10-year return may not be as impressive.
Over a longer period those short term high performers tend to gravitate to a tight range, says Paul. "The key for a KiwiSaver member would be to ensure they are in the right fund category over their lifetime, and avoid the lemons in that category."
Watch out for the hype
Our brains are programmed to take mental shortcuts when making financial decisions and to justify what we've done 'til the cows come home.
Consider smaller players
If you are still with the default provider assigned to you, you may be in the wrong place. Michael Chamberlain, former owner of KiwiSaver provider SuperLife, points out the brand name doesn't matter, it's what's under the bonnet.
Don't trust your mates. You're less likely to make beginner's errors if you consult an independent professional. "They can provide an independent perspective or emotion override which can be invaluable for making more informed decisions," says Michael Raynes of Fisher Funds.
Generate KiwiSaver sits nearly all its members down with financial advisers. AMP offers free face-to-face or over the phone advice. The Financial Markets Authority has just given the go-ahead for companies to offer robo-advice, which many believe will be as good as a human.
Use online tools
Sorted or the new Pocketwise.co.nz have tools to determine your risk tolerance and the right fund for you. Kiwi Wealth offers customers Future You, a tool for weighing their options and working out the retirement future according to their KiwiSaver choices. This tool will be developed into fully fledged robo-advice. Other providers have useful tools on their websites, too.
Choose a fund that ages with you
Some funds automatically move your money from growth to balanced to conservative as you age, says Richard James of NZ Funds.
The best thing about these is it means younger people don't leave their money in a conservative fund when they really need growth for a more comfortable retirement.
Invest according to your morals
Libby Sharp of Craig Investment Partners bought this issue up. Most funds have divested themselves of so-called sin stocks. But you can go actively choose an ethical KiwiSaver from the likes of Craigs, SuperLife, Booster, AMP and ANZ.
Any KiwiSaver fund is better than none If you're not contributing you're missing out on free money from the Government and, possibly, your employer's contribution.
Are you in the best KiwiSaver?
Conservative - Returns net of charges & tax
AON - Russell Lifepoints Moderate 5.45%
AON - Russell Target Date 2025 4.83%
OneAnswer Conservative Balanced 4.60%
AON - ANZ Balanced 5.78%
AON - Russell Lifepoints Balanced 5.05%
OneAnswer Balanced 4.94%
Fisher Funds Growth 6.05%
AMP - ANZ Balanced Growth 5.45%
OneAnswer Growth 5.25%
* Best performing funds in the 10 years to October 2017. Per annum returns.
* Source SavvyKiwi/Disclose