COMMENT:

What's the most money you've ever wasted?

I've heard everything from booking flights on the wrong weekend to painful stories of student loans that didn't result in a degree, to tens of thousands of dollars lost through real estate or business mistakes.

Mine was probably using a potential house deposit in my early 20s to travel instead. There is plenty of time to travel, but getting on the property ladder as young as possible matters.

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Sometimes the biggest financial mistakes are the things we don't do. That may be failing to switch out of the default/conservative KiwiSaver fund - though not joining at all could be worse.

If you don't choose, you'll be allocated one of nine default funds. The main aim of default funds is preserving the capital, keeping pace with inflation rather than growth.

Too often default customers have a false sense of complacency. Few know that their money will be puttering along in first gear.

For your money to grow you need a balanced or growth fund that takes a few risks and gets far better growth in the long run. Too many people in low-growth funds is bad for both the individual and the country as a whole.

Over a lifetime, it could mean hundreds of thousands of dollars less in retirement, says Jacqueline Taylor, co-founder of Juno KiwiSaver. Default funds, she says, should just be holding pens until you make a decision on the best fund for you.

That could be sustainable/environmental funds, or funds with lower fees, better returns or good service.

When Simplicity founder Sam Stubbs was in charge of TOWER KiwiSaver (now owned by Fisher Funds) he set up a call centre that contacted every member in his company's default fund. They were then taken through a needs analysis, which resulted in about 95 per cent of default customers switching to a balanced or growth fund.

"Where the help and advice is most needed and valuable it has been the least-delivered," says Stubbs.

This type of approach involving a duty of care should be compulsory, says Stubbs. It's a view mirrored by Susan Taylor, chief executive of Financial Services Complaints Limited.

"My personal view is that in order to be a government default scheme, the KiwiSaver fund manager should have to provide all new KiwiSaver clients one free consultation six months after the person enrols."

In July a group of financial advisers called on the Government to change all the default options to balanced. They asked for default funds to be forced to stop taking clients unless they met specified switch-out rates. John Cliffe, who led the group, estimated 400,000 KiwiSavers in default funds had missed out on $1b over the past six years.

One of the problems with default and similar funds is many people see the word "conservative" as synonymous with safe and don't realise how much damage they may be doing to their retirement. Poor returns are suffered primarily by New Zealanders least equipped to make considered investment decisions and provide for their retirement, says Cliffe.

Of course, the Government can't win. If it enrols Kiwis in anything but the most conservative fund then share prices take a subsequent tumble, and it will get the blame.

Anyone who thinks they are in the wrong fund and can't afford financial advice can use a variety of online tools to help make a decision. These include: Sorted.org.nz, SavvyKiwi.co.nz, Canstar.co.nz's KiwiSaver comparison, and the Financial Markets Authority's FMAhealthchecker.co.nz.

Even if you do decide default is the right thing for you, it's possible to find another conservative fund with better returns. Some also have lower fees, which make a big difference in the long run.

According to the FMA's KiwiSaver Tracker data, the five-year average return on conservative funds varies between 5.9 per cent for AMP and 8.1 per cent for Generate, which makes a big difference over time. The fees on the conservative funds vary between 6.2 per cent of returns for ASB and 28.4 per cent for Lifestages over that five-year period.