Take charge of your KiwiSaver account and ensure your investment is working hard for you. Generate adviser, Edward Bryant, discusses the benefits of advice sessions to help you optimise contributions and fund selection.

Are you missing out on potential gains from your KiwiSaver investment? Whether you’ve set it on autopilot or stopped contributing, now is the time to seek advice. Regular contributions and informed decisions can transform your financial future.

Many young and not-quite-so-young people signed up to KiwiSaver when it first launched, or they started working and then forgot about it, says Generate adviser Edward Bryant. That means too many are missing out on potential investment returns that could help them buy a first home or retire comfortably.

Rotorua-based Bryant is one of a team of Generate advisers nationwide who offer no-obligation, in-person KiwiSaver advice sessions. The sessions empower clients to understand how KiwiSaver works, set goals, and make tweaks if necessary, that could help maximise their returns over a lifetime.

No obligation advice

Generate offers one-on-one KiwiSaver advice sessions with no obligation to join Generate. It has a nationwide team of advisers such as Bryant who are happy to meet you at your home, work, a café, or online via Zoom at a time that suits you. They’ll talk you through all your options, so you can make an informed decision and have a better idea of what you’re on track to have at retirement.

Advice sessions tackle everything from the right level of contributions at every age and stage in life, to choosing a fund to match your personal appetite for risk. “You need to make sure you set up your KiwiSaver account right for your goals,” Bryant adds..”

Whatever your goals and priorities, making good KiwiSaver account decisions can mean having a better financial future, he says.

The benefits of contributing to the right fund

Many New Zealanders are paying into their KiwiSaver accounts but are in the wrong fund type for them, says Bryant. It’s something Generate advisers see regularly with new clients who haven’t had advice before.

Growth and aggressive funds will typically have better outcomes at times over the decades than a default fund.

“Many people sign up to a KiwiSaver scheme through work or go to their bank and end up in a default fund,” he says. “Then they’ve forgotten about it.”

“Your fund choice is arguably the most important part of your KiwiSaver investment and most overlooked,” says Bryant.

Choosing the right fund type is one of a number of tweaks clients typically make after seeking advice.

Advice and education now will pay off

Every age group has a mix of people with different priorities and goals. In the 30 to 45-year-old age group, clients are often saving for a first home or have recently overcome that hurdle, says Bryant.

“It’s tempting after buying a home to put KiwiSaver contributions on the back burner. You start back at square one with a $1,000 balance. That’s actually the stage in life where contributing and making some changes to your KiwiSaver account can have the biggest impact.”

Increasing, not stopping, contributions after buying a first home is desirable. Time is an investor’s friend and the earlier every dollar is contributed the more time there is for it to snowball. That’s why contributing a little and often is the golden rule, especially for younger age groups. The longer the time horizon, the greater the investment growth.

Generate advisers talk to clients about how upping contributions to 4, 6, or 8% can benefit them. “Increasing your contributions by just 1-2% could potentially add tens of thousands of dollars to your KiwiSaver account at retirement. You’re never going to regret it. I’ve never talked to somebody who’s 65 and said, ‘I’m really gutted that I put that extra bit into my KiwiSaver account’..’”

Subhead: Any age is a good age to engage

For people aged 45 to 60 it’s never too late to take good advice, ramp up contributions, and earn the best returns over the next decade or two, says Bryant. Some people can afford to contribute more to their KiwiSaver account once children have left home and the mortgage is paid off.

“When people get to those later years they can start to panic a bit. It’s definitely harder, the later you start,” says Bryant.

A Generate KiwiSaver adviser will create projections for you to illustrate what a good retirement might look like and options to maximise savings. “Projections can really spark people into making those changes and getting in the right fund. It will start to cost you in the long run if you don’t.”

Subhead: The option of upping contributions

While upping contributions is great at any age that leads to significant impacts on your KiwiSaver investment over -time, switching to a growth or aggressive fund for a decade or two can also be helpful for some people. “Whilst we can’t predict the future, these funds often return 1-2% more per year than balanced and conservative funds. Compounded over time that extra few per cent really adds up.

“Over 300k Kiwis are still in default funds and many others stay in conservative or balanced funds because they’ve been scared off by the ‘risk’ element,” says Bryant. “The wording has made people think that these high-risk funds are a real gamble with their money.” A better way to look at it is “volatility” [ups and downs] as opposed to the “risk” of losing everything. Investors get more volatility along the way, but usually higher growth as a result.

“At the age of 50, there’s still 15 years to go before you can touch the money,” he adds. “If you don’t have a big balance, there’s a lot to gain by dialling up and very little to lose. Time can really help to mitigate [that volatility].”

But before switching, talk to your adviser about your risk tolerance and options. Aggressive and growth funds aren’t right for everyone – particularly if you are looking to withdraw within two-three years. And some people simply can’t sleep at night with money in a volatile fund. Others are happy with the ups and downs along the way in return for greater growth.

KiwiSaver for self-employed contractors and property investors

Bryant says KiwiSaver isn’t just for employees. Contractors and self-employed people can benefit. They often tell him that investing in a KiwiSaver account isn’t for them. Yet the first $1042 invested each year attracts a $521 in government contributions. “It’s pretty difficult to match that 50% return,” he says. “That’s the best small investment you’ll likely ever make.

“Likewise, property investors should view a KiwiSaver account as another string to their bow,” he says. “I’d never discourage someone from doing property investment. Go for it. But KiwiSaver is a great way to hedge your bets.” Because of its diversification, KiwiSaver helps to lower the overall level of risk of relying on business profits and/or property investment for retirement.

For a 30 year old, the minimum $1042 contribution combined with the government top up would grow to around $55K at retirement - plus investment returns would be on top, says Bryant.

Educate yourself

One of the main reasons Generate was founded was the education piece: to address a gap in the market of Kiwis not understanding how KiwiSaver works and how to make the most of it.

“The great thing about having a KiwiSaver account is that it is quite a simple product, and we can sit down and take you through from start to finish exactly how it works,” says Bryant.

“We have some awesome calculators that we use to show projections of what you could finish up with when you do buy that first home or when you’re getting to 65.”

Advice sessions generally last about 45 minutes, and you’re welcome to bring along a friend, partner, house mate, or colleague, says Bryant.

A Kiwi business working for you

Generate is proudly New Zealand-owned and operated and has been around for 10+ years. It has over $5B funds under management. It is award-winning (Consumer NZ People’s Choice, Canstar Most Satisfied Customers, Reader’s Digest Trusted Brand) and have a track record of strong long-term performance:

• The Generate Focused Growth Fund ranked 1st out of 8 NZ Multi-Sector Aggressive Category Funds for 10-year results to 30 June 2024*
• The Generate Growth Fund ranked 2nd out of 13 NZ Multi-Sector Growth Category Funds for 10-year results to 30 June 2024*
• The Generate Moderate Fund ranked 1st out of 13 NZ Multi-Sector Moderate Category Funds for 10-year results to 30 June 2024*

Generate’s goal is to educate and empower Kiwis to make smart financial decisions that will help them be better off in the future.

To find out more or request a meeting with a Generate adviser, head to generatekiwisaver.co.nz/letschat

No part of this article is intended as financial advice; it is intended as general information only.

Past performance does not guarantee future performance, and all investments involve risk and returns can be negative as well as positive.

*Source: Morningstar KiwiSaver Survey June Quarter End 2024. The Generate Focused Growth Fund returns ranked 1st out of 8 NZ Multi Sector Aggressive Category Funds, the Generate Growth Fund ranked 2nd out of 13 NZ Multi Sector Growth Category Funds and the Generate Moderate Fund ranked 1st out of 13 NZ Multi Sector Moderate Category Funds, for a period of 10 years as of 30/06/2024. © 2024 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution in New Zealand.

To see a copy of the product disclosure statement or advertising disclosures, see generatekiwisaver.co.nz/disclosures The issuer of the scheme is Generate Investment Management Limited.