"The ASB has stolen money out of my KiwiSaver." I hadn't even had my breakfast when one of my offspring hit me with this statement one morning in January.

The KiwiSaver account in question had dropped a few hundred dollars over the previous week, it transpired. It's great that he was tracking his KiwiSaver balance. Clearly, however, I was remiss in explaining the intricacies of how KiwiSaver worked and that balances can fall.

The fall was temporary thanks to wobbly share markets. In the following weeks, the fund regained the ground quickly and at the time of writing had grown a little more.

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The issue is that people think of their KiwiSaver as a bank account. Each week or month their account grows a little as a small percentage of their pay is diverted into it. But it's also collecting investment growth. The payback for that additional growth is "volatility" or in plain English ups and downs.

Mostly, like in January, they're relatively small. But they can be large in years such as 2008 when the Global Financial Crisis (GFC) hit. It took three years for balanced and growth KiwiSaver funds to recover from that and a bit longer for them to leapfrog conservative funds.

A growth fund isn't cash in the bank. It's made up of lots of different shares from different industries and parts of the globe. The price of the underlying shares in a KiwiSaver growth fund do not go up in one straight line.

A picture says a thousand words and my way of explaining this to the offspring in question was to track down a chart showing the performance of the ASB's KiwiSaver growth fund from 2007 until now. It showed that $1 invested then would be worth more than $2.20 now. It also demonstrated all the ups and downs along the way.

Periodic downs aren't "losses" because you haven't lost any money unless you cash up and withdraw your money when the markets are down.

For most of us the downs can be viewed as a bonus because your regular investment will be buying more of the fund's units after a drop.

Anyone who kept paying into KiwiSaver over those three years was buying bargain units. If you started investing at the bottom in 2008 your $1 would have gone up 2.5 times.

Another important point is, providing you've been saving for a few years, even a 10 per cent drop would most likely leave you way ahead of what could have been if you'd kept the money in the bank or a conservative fund.

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The years such as 2008 and the next downturn really do matter, however, if you've banked on withdrawing a certain sum and the balance drops at that very moment in time. Anyone who needs to withdraw all within a five-year period probably shouldn't be in a growth fund. Just in case.

I just want to point out that the ASB growth fund, singled out only because it's the fund in question that sparked this article, has returned on average 8.95 per cent per year for the past five years. That's an awful lot more than the 4.65 per cent average for conservative funds in that period. Volatility brings returns.

You can bet your bottom dollar that a regular term deposit with any of the banks would have returned 3 per cent per annum over that same five-year period at best. Yet the average punter with their money in the bank doesn't see the balance ever go down. I could argue that by only paying paltry interest the banks are stealing our money, but that's another article.

Finally, if you're the sort of person who panics when you see your KiwiSaver balance fall, it might be a good idea to look for strategies to stop doing this. That might simply be choosing a fund for the long term and removing the app from your phone. If you know you're in a well-managed fund that matches your time horizons, then set and forget.