I've noticed you recommend that some readers put extra money into KiwiSaver when they have a windfall and don't know where to invest.

I agree that is a safe and logical thing to do. However, do you think it's better for them to invest the money outside KiwiSaver?

Let's assume I've got a windfall of $10,000 and I have a KiwiSaver with Superlife's Superlife30 Fund. I'm already paying 3 per cent into my KiwiSaver, my employer is matching that 3 per cent, and I also get the $521 tax credit. So I basically max out the benefit of KiwiSaver.

If I put the 10K in KiwiSaver, I will not get any extra benefit, and the money is locked in until 65. With Superlife30, I will be paying a 0.39 per cent management fee along with a 0.2 per cent asset management fee and $33 annual fee.

Instead, I can still invest the money in Superlife30, not with KiwiSaver but as an ordinary investor. You can buy the exact same fund. I can withdraw my money any time, plus I will be paying a lower management fee at 0.19 per cent.

Is my calculation correct? Or have I missed something?

There are a few factors to weigh up in the KiwiSaver versus non-KiwiSaver decision. Perhaps the most important is your personality.

If you have $10,000 sitting in an accessible investment, are you likely to one day say, "Blow it all. Life is short. I'm going on a big trip".

That's not necessarily a bad thing. Some people live too much for tomorrow. But if you really want to save the money for retirement, you're best to tie it up in KiwiSaver.

However, if you're more disciplined, it's a good idea to consider a non-KiwiSaver investment. You never know when you might want access to the money in an emergency or to invest in, say, your adult child's promising new business.

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A second factor, as you point out, is fees. In the case of SuperLife, fees are lower in their similar non-KiwiSaver investments. However, many providers charge higher fees outside KiwiSaver. It's important to check that out.

Your decision should also depend on how close you are to NZ Super age, when you'll gain access to the money either way, and how much other accessible money you have.

Fun with shares

In last week's Herald you refer to direct investing in shares as being a hassle. I find it anything but, as it gives me a number of attractions.

I have control over my own investments and am not subject to the weighting and formulas which fund managers are required to adhere to. For example, a few years ago Telecom carried a heavy weighting in most funds because of its size, but its performance during the period was mediocre at best, so I left it alone.

Being a retiree, my income is below the level of the company tax rate so I receive a pleasing four-figure tax refund each year. I keep a manual record of my dividend statements as a check, but this only involves about 50 entries (1 per week) for the 25 New Zealand only companies I invest in.

And being New Zealand companies, I have access to the latest information as to current performance and take the opportunities to observe business activity first hand - e.g. Michael Hill, Precinct Properties, Auckland Airport, Sky City etc.

Being in Auckland, I can attend annual meetings, which can be, at times, enlightening. And the afternoon teas are usually most enjoyable and provide opportunities to chat with company staff and other shareholders.

Rather than being a hassle I consider direct investing to be a lot of fun.

That's great. I've acknowledged before that some people - including my father when he was alive - enjoy direct share investment. You've explained the appeal well.

A few comments:

• While non-direct investors - in KiwiSaver or other managed funds - don't receive tax refunds, they are automatically taxed at their correct rate. Also, most funds are PIE funds, and that gives investors a tax advantage. Still, some people love to receive a tax refund cheque.

• I'm glad to see you have a good spread of shares, with 25 companies. Many direct investors are too undiversified.

• Individual direct investors often don't do as well as those in managed funds. But I've yet to enjoy an afternoon tea put on by a managed fund!

Testing banks

I read an article, and can't remember whether it was in your column, re stress testing of our major banks in the event of a housing price slump.

My question, being a customer of Rabodirect or Rabobank, is was this part of the process?

Also, this bank's parent company I think is either in Denmark or Sweden. And given the state of the European markets I have concerns.

Any knowledge you may have in respect of this bank I'd be grateful to hear.

You're referring to my July 23 column, in which I wrote about recent Reserve Bank stress tests.

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The researchers assumed house prices fell 55 per cent in Auckland and 40 per cent elsewhere, other property and gross domestic product also fell, and unemployment rose.

"In plain language, banks' profits declined and so they had to stop paying dividends to their shareholders - but the banks remained solvent," said a Reserve Bank spokesman. For more on this, see tinyurl.com/stresstestNZ.

In response to your letter, the spokesman says, "The stress tests covered the four Australian banks that account for 85 per cent of the banking market. Rabobank was not specifically included in the stress tests of the banking system, but we did include it in stress tests of the banking system's dairy lending.

"In late 2015, the five largest dairy lenders (which includes Rabobank) participated in a stress test that posed a scenario of sustained low milk prices and sharp falls in dairy land values." That report concludes, "the scenarios generate significant increases in loss rates that are manageable for the banking system as a whole. However, there is a risk that the lags involved in resolving stressed dairy assets are larger than reported, potentially creating an ongoing source of uncertainty for banks."

Nevertheless, the spokesman says, "With any of these sort of queries we take care to point out that the likelihood of a bank failure is very low. The Reserve Bank of New Zealand regulates all banks in New Zealand and requires them to hold levels of capital and liquidity that act as a buffer against the likelihood of failure." On your comment about Europe, you're not quite right about Rabobank NZ's parent company. It's a huge international bank based in the Netherlands.

How does the relationship with its parent affect the NZ bank? "The Rabobank parent company's credit rating impacts the credit rating of Rabobank New Zealand, which affects the cost at which Rabobank New Zealand can raise funds," says a spokeswoman. "Rabobank New Zealand also receives intra-group funding from its parent, which it could obtain from other sources.

"That said, Rabobank New Zealand Limited is a New Zealand-incorporated registered bank operating in its own right as a well-established, financially-robust business, under the Reserve Bank's strict prudential supervision which applies to all New Zealand banks." Rabobank NZ has a Standard & Poors credit rating of A. This is lower than ANZ, ASB, BNZ and Westpac, all at AA minus, and Kiwibank, at A+. But an A rating is still regarded as "strong".

Overseas pensions

I recently read in your column about having a government pension from another country affecting how much you get from NZ Super. Does this apply for all countries or is there a list?

I am still 20-plus years away from retirement, but this made me think if there is still a point in continuing my contributions to my home country if I will end up with pretty much the same amount come retirement age.

There's no list of countries. Generally, if you receive a pension run by an overseas government, that pension will be deducted from the amount of NZ Super you receive.

But there are exceptions. One is for government occupational pensions paid "purely for a period of employment with a government agency (that is, it is the equivalent of a private occupational pension, but the employer happens to be the government)," says a spokesman for the Ministry of Social Development.

Another - and this is relevant to you - is that "The Ministry does not currently directly deduct the portion of an overseas pension that is based on voluntary contributions.

"In order to receive New Zealand Superannuation as well as an overseas pension, we would require verification from the overseas agency that the pension, or some proportion of it, was based on voluntary contributions," says the spokesman.

"Because every country calculates pension amounts in a different way, we cannot attempt to calculate the proportion of a pension that is voluntary. We have to rely on the paying country to tell us." It seems, then, that it probably makes sense for you to continue your contributions.

Nobody can guarantee a future government won't change the rules. But if your contributions are subsidised or tax advantaged by your home country government, or if there's some other incentive for you to contribute, it's probably worth taking the risk.

It seems unlikely that that rule will be changed to your detriment - although no guarantees!

Ethical KiwiSaver

Suddenly it's become fashionable to take note of whether your KiwiSaver fund invests "ethically" - perhaps avoiding investments in companies that make armaments, alcohol, cigarettes or pornography, or companies with a bad environmental track record, or similar.

I've been writing about ethical KiwiSaver funds since the scheme started, and every now and then I've published a list of these funds. It seems like a good time to do it again.

But before you switch to an ethical fund, it's important that you don't move to a fund that's too risky, or not risky enough, for you. If you're not sure what's right for you - and many people aren't - go to the KiwiSaver Fund Finder on sorted.org.nz and click on Find the Right Type of Fund for You.

Note, too, that fees make a big difference to how fast your KiwiSaver account will grow. So while you're checking out ethical funds, see how their fees compare with other funds. You can do this on the KiwiSaver Fund Finder.

That tool will also give you brief information on how each fund invests.

The following are the ethical funds I can find on the Fund Finder:

• Balanced funds: Craigs Investment Partners kiwiSTART Quay Street Balanced SRI Fund; Grosvenor Socially Responsible Investment Balanced Fund; and SuperLife Ethica.

• Growth funds: Grosvenor Socially Responsible Investment Growth Fund.

• Aggressive funds: OneAnswer Sustainable International Share Fund.

Two other providers not included on the Fund Finder are: Amanah KiwiSaver Plan, which offers an aggressive fund that is Shari'ah compliant, and the Koinonia KiwiSaver Scheme, which has an ethical investment policy for its Income, Balanced and Growth Funds. Koinonia requires applicants to "express a Christian faith".

• Mary Holm is a freelance journalist, member of the Financial Markets Authority board, seminar presenter and bestselling author on personal finance. Her website is www.maryholm.com. Her opinions are personal, and do not reflect the position of any organisation in which she holds office. Mary's advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following it. Send questions to mary@maryholm.com or Money Column, Business Herald, PO Box 32, Auckland. Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Sorry, but Mary cannot answer all questions, correspond directly with readers, or give financial advice.