Guide to Maximising Your KiwiSaver - Milford Asset

Guide to Maximising Your KiwiSaver

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This quick and interactive Guide outlines how you can seek to maximise your investment to help ensure you don't come up short in retirement.

You can then download and keep your results.

This Guide is not intended to be advice tailored to your particular financial situation or circumstances. Instead it is intended to be ‘class advice’ only. We will talk generally about products and how they might be suitable for generic groups of investors. The information that we provide is factual. You are responsible for making your own investment decisions, by taking the information we provide and applying it to your own situation. If you require personalised financial advice you should speak to an Authorised Financial Adviser.

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How long you are likely to live

Statistics New Zealand has done extensive research on life expectancies; see how long someone in your position is likely to live:

As you can see you’ll be retired for a long time. The question you need to ask yourself is will your current KiwiSaver investment strategy provide enough money to last you through retirement?

* Statistics New Zealand “How long will I live” calculator 2015. Based on median death rates.

Why your contribution rate matters

Saving only 3% of your salary each year may not be enough. It can be unbearable reaching retirement only to realise you haven't saved enough.

To minimise this risk, see the difference contributing just a little bit more will make to your investment:

Figures do not account for inflation. Assumes 6% p.a. investment returns (after fees & tax), 3% employer contributions, 2.5% p.a. salary growth and no withdrawals.

You can increase your contributions by simply telling your employer. It may be more affordable than you think too:

Weekly Contributions

Current Salary 3% 4% 8%
$0 $0 $0 $0

Past performance is not a guarantee of future returns

How your investment strategy affects your savings

When investing you should always consider your investment time horizon. We consider anything over 10 years as a long time horizon and anything less than 3 years as a short time horizon.

Over the long term, growth assets, such as shares and property, have outperformed conservative assets, such as bonds and cash, despite occasional periods of substantial negative performance.

Here’s a look at $10,000 invested since 1995.

We believe growth assets will continue to outperform conservative assets over long time periods. However, the benefit of holding conservative assets is that they are less volatile, providing your portfolio with stability.

Your desired mix of assets can be achieved by blending your KiwiSaver investment between growth, balanced and conservative funds, based on the length of your time horizon.

Past performance is not a guarantee of future returns

* IRESS/Bloomberg. All data is over time period from 31/12/95 – 31/12/14 in local currencies. “NZ Shares” refers to the NZ All Ordinaries total return index. “Australian Shares” refers to the ASX 200 Accumulation Index. “NZ Bonds” refers to ANZ New Zealand Government Bond Daily Gross Return Government Stock Index. “Australian Bonds” refers to Bank of America Merrill Lynch 3-5 year Australian Government Index

How to stay strong during market downturns and think like a pro

KiwiSaver is a long term investment. If you're investing in growth assets and have a time horizon of more than 10 years, the worst time to change your strategy is during a market downturn.

As you can see below, if you decide to abandon growth assets during a downturn you can miss out on potentially large recovery returns.

Many investors panic when things get ugly. Professional investors understand that market pullbacks are natural. If your goal is to invest for long term growth, it is best to keep your nerve during tough times and believe in your strategy.

Past performance is not a guarantee of future returns

* IRESS/Bloomberg. “NZ Shares” refers to the NZ All Ordinaries total return index. “Australian Shares” refers to the ASX 200 Accumulation Index. In local currencies over the time periods stated.

How to prepare for inflation's insidious bite

You should have an idea how much income you will need in retirement, while remembering that inflation will erode the real value of your money over time.

Inflation has averaged 2.5% p.a. since 1990. Chart assumes inflation rate of 2.5% p.a.

As you can see above, inflation will cut the real value of your income by more than half over the next 30 years. This is why saving and investing wisely now is so important.

History has shown that increasing your holdings in growth assets generally puts you in a better position to neutralise the impact of inflation over long time periods.

Past performance is not a guarantee of future returns

* Inflation annualised 2.5% since 1990. Reserve Bank of New Zealand.

Ready to take the next step?

We hope you found this Guide a useful reference to avoid the major pitfalls of investing. It is now up to you to ensure you maximise your KiwiSaver savings.

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We hope you enjoyed this Guide

Find out how Milford’s unique approach to investing can help you or contact us on:

Tel: 0800 662 346 or 09 921 4700


While care has been taken to ensure the Guide's calculations are accurate, no warranty or representation is given as to the accuracy or completeness of the information provided. Milford Asset Management and its subsidiaries are not responsible if real outcomes differ from the Guide's calculations