Share markets are having a tough time as they digest the href="https://www.nzherald.co.nz/business/liam-dann-what-trumps-tariff-turmoil-means-for-new-zealands-economic-recovery/WSORBIGJSJH4RK7T6DQDJGA5MQ/" target="_blank">potential impact of the tariffs. The NZX had its steepest fall since March 2020 on Monday and markets in the US were braced for a rough start to the week’s trading.
Many KiwiSaver members have seen their balance fall by thousands of dollars as a result.
While that generally doesn’t matter to people who are saving for retirement many decades away, it can be more of a concern to those who are about to withdraw money, whether that’s for a first home or because they are at the age where it is possible.
Karen Tatterson, a mortgage adviser with Loan Market, said she had heard “quite a few comments” from first-home buyers with concerns about KiwiSaver.
Glen McLeod, head of Link Advisory, said he had several clients comment on a recent dip in their balances but it hadn’t been enough to stop them putting together a deposit.
“I strongly encourage anyone who hasn’t sought advice about their KiwiSaver fund to do so - particularly if they’re planning to use it towards a first-home deposit.
“It’s important to ensure they’re in a fund suited to them and their goals.”
One first-home buyer said they had been required to find an extra $2000 to make up the difference between what they had expected to have in their KiwiSaver and what was available when it came time to withdraw.
KiwiSaver experts say there are a few things you should do if you’re worried.
Get advice
Fisher Funds KiwiSaver general manager David Boyle said people should get financial advice as a first step.
“Before you make any decision in respect of changing your fund or anything around those lines, either talk to a financial adviser you might be working with, or your KiwiSaver provider.”
He said that would give people information about their fund, what had happened and how their individual circumstances might affect their investing decisions.
Get financial advice to help plan for your future home.
Look at your options
People who need their money soon should usually be in a conservative fund. Only people who have time to ride out market movements should be in growth or aggressive funds.
But over the last four years the overall investment profile of KiwiSaver has skewed toward growth.
Growth funds have outperformed more conservative options, too. That may mean that some people who did not have a very long time until they needed their money may have taken a chance on the higher-risk investments.
If you realise too late that you should not have been in a growth fund, Boyle suggests considering whether there is any other money you could use for your deposit so that you don’t have to lock in a loss by cashing out your KiwiSaver.
People could talk to their banks about what options they might have, he said. “This is a pretty stressful time at the best of times, buying a first home - talk to your provider and bank, what wriggle room is available?”
Lock in your deposit
If you’re going to buy very soon, you might need to cut your losses and shift to a cash fund, so that you know exactly what you have available to use as a deposit.
Sam Stubbs, Simplicity KiwiSaver founder, said it’s probably not a good idea to try to time the market when you do this.
“Who knows what financial markets will do in the short term? They can go up as much as they can go down. The most important thing is to make the right decision, to be in the right fund.
“If you end up crystallising some loss, that’s always a shame of course and no one wants that to happen but the most important thing at any point in time is to be in the right fund for you.
“In most circumstances I think most financial advisers will say we need to get this right now let’s not try and time the market - that’s a very perilous game that the majority of people lose.”
Boyle said it was a reminder that those who were still in the planning stages of buying a home should think about moving into a more conservative fund ahead of time.
“So when they get to this position in future the market is not going to determine their outcome.”
