Safety first with house money

My wife and I are now over 65 but we have continued with our KiwiSaver accounts as we have been happy with the returns. Last year we sold our house in Palmerston North and moved to Hawke's Bay. We are renting in Napier and looking to buy a place around here sometime over the next six months. We aren't in a hurry as we want the right property. We will use some of our KiwiSaver funds so my question is, how quickly can we get the money out? Also, with financial markets being unsettled, how safe is our money? We are in the BNZ Conservative Fund.

Anyone who has been in KiwiSaver for at least five years and become eligible for NZ Super (currently age 65) is able to withdraw some or all of their money.

In your case, look for the Retirement Withdrawal Form on the BNZ website, or call them on their 0800 number.

The two-page form must be signed as a statutory declaration before a JP or solicitor.

One reason for this is the requirement that you declare any periods during your years of membership when your principal place of residence was outside New Zealand.

The fund manager will then check that you did not receive any member tax credits that you were not entitled to.

Only contributing members living in New Zealand are entitled to the annual member tax credits from the government.

You also need to supply a certified copy of your driver's licence or passport, so have this with you when you meet with the person taking your declaration.

According to the form, a full withdrawal may take 15 business days to process.

Various checks need to be done by the fund manager and Inland Revenue, particularly if the member is still contributing or has member tax credits owing.

A partial withdrawal may be quicker, but you will need to leave at least $1000 in your account to keep it open.

Are you in the right fund? The BNZ website provides returns for all their funds on their website, and you will see that returns have been negative for all but the Cash Fund over the month of January 2016.

The Conservative Fund achieved -0.38 per cent over the month. This is not a significant drop, but if markets continue in negative fashion you could find yourself with less in your fund than you expected when the time comes to withdraw your money.

The Conservative Fund is suitable for lower risk investors but around 20 per cent is invested in shares so it won't give investors an entirely smooth ride.

As you are actively looking for a house, depending on how much you plan to take out of your KiwiSaver, you may be better off in the Cash Fund.

According to the fund description, the Cash Fund "is best if you're a cautious investor, who doesn't feel comfortable investing in anything that could have potential for negative returns".

It is also suitable for investors like you with a shorter term timeframe.

Switching between funds is straightforward and you should ring the fund manager if you wish to investigate this option.

Most investors with a longer term outlook can put up with some volatility.

In fact, if they are contributing regularly through their wages they can end up with a better return in the long run through 'dollar cost averaging'.

But someone in your situation looking to buy a house should put safety before all else.

- Shelley Hanna is an authorised financial adviser (FSP12241). Her disclosure statement is available on request, free of charge, by calling (06) 870 3838, or see peak.net.nz. The information contained in this article is of a general nature and is not personalised. Send your KiwiSaver questions to shelley.hanna@peak.net.nz.