Money Week 2018: Managing risks in KiwiSaver and investments

The theme of the seventh annual Sorted Money Week is weathering the storm, or finding ways to become financially resilient.

To help out, Canstar is gathering some top tips on managing money – and how to be prepared should things not go to plan on the home finances front.

Firstly, let’s have a look at: How to weather the storm when it comes to KiwiSaver and investments.

Diversification can help you manage investment risk

Have you heard of the saying don’t put all your eggs in one basket? Well, diversification in investment is really about applying this principle to where you choose to put your savings. Risk is managed in KiwiSaver by scattering money across a wider variety of asset clauses, such as shares, bonds, property and cash – so that the poor performance of one asset can be offset by the good performance of another.

Many KiwiSaver providers will also let you split your KiwiSaver contributions across different fund types, such as growth and balanced. You can read more on the different fund types, here.

Knowing your risk appetite – and choosing a KiwiSaver fund type to suit it – will also help you with managinf a KiwiSaver storm. We’ve got a guide on that, here.

Canstar is not a financial advisor, so we can’t advise you on what specific fund type to take out, we can help you compare KiwiSaver providers and funds, so that you can make a more informed decision on your investment.

Compare KiwiSaver funds with Canstar

KiwiSaver fluctuations are to be expected – but it’s not always bad

Another key aspect of weathering the storm when it comes to KiwiSaver and investments  is to expect that there will be ups and downs in the investment. As KiwiSaver is designed as a long-term savings strategy, the idea is that dips in the investment will not be permanant. And that there will be ups, not just downs. So don’t panic drop out of your KiwiSaver!

Immediately following Donald Trump’s win, there were fluctuations in shares and property, which had flow-on effects to KiwiSaver accounts, with drops in balances.

But providers reminded KiwiSaver members not to panic, as fluctuations are to be expected.

Write a will to protect your KiwiSaver

Writing a will is a key part of helping your family weather the storms of what to do with your investment, should you pass away. Without a will, your KiwiSaver provider needs a letter of administration from your high court.

Writing a will means you are creating an important legal document. Your will outlines your wishes of how your money and assets should be distributed. Consider how to write a will that protects your finances as well as any prized possessions. A will can include “letters of intention” that could cover anything from your business, to what you want done with your antique computer collection.

Check out Canstar’s guide on how to write a will to protect your KiwiSaver.

Compare KiwiSaver funds with Canstar

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