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Buying your first home without KiwiSaver

June 22, 2020

If KiwiSaver isn’t an option to help you into your first home - don’t let that hold you back.

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Knowing when to buy your first home is always a tough decision – and the current economic uncertainty as a result of Covid-19 hasn’t made it any easier.

On the one hand, this could be a great time to buy. Interest rates are at an all-time low, and the Reserve Bank’s decision to remove loan-to-value restrictions has made bank loans more accessible for many people with smaller deposits.

But on the other, no-one’s sure what’s happening with the housing market. If prices are going to fall, you might decide to wait and see.

And if the pandemic has put a dent in your income, or made your future earnings more uncertain, you may not be able to move on your housing plans as quickly as you expected.

So how can you still keep up the momentum of saving for your first home while you wait for the right time to make a move?

If KiwiSaver isn’t an option for you – maybe you’ve recently returned from living overseas, or haven’t been in a KiwiSaver scheme for the required three years – a managed fund can be a great way to get serious about investing for big life goals.

Check out these three reasons to consider using a managed fund to help you buy your first home.

1. You’ll have the potential for better returns

Over time, managed funds generally deliver higher returns than term deposits or savings accounts, although you’ll need to be comfortable with a higher degree of risk.

The longer you can leave your money in, the longer it has to grow. Managed funds are particularly suitable for investors who can leave their money in for a medium term – about five years or more.

2. You’ll have the freedom to choose your contribution

For some Kiwis, having fewer opportunities than usual to spend during lockdown has left them with an unexpected nest egg.

In our low-interest environment, investing your lump sum is more likely to grow your wealth than putting it into a savings account or term deposit.

The beauty of managed funds is being able to choose how much you want to contribute. With Kiwi Wealth Managed Funds, you can open a new account from $100 and make contributions of as little as $1.

Even if you’re making small contributions, investing regularly can make a big difference to your wealth over time.

3. You’ll have the flexibility to access your money

In these unstable times, it’s good to know you can access the money in your Kiwi Wealth Managed Funds account if you need it.

Even if you have a KiwiSaver account, putting any extra money into a managed fund can give you more flexibility. It’s another way to save for a house, but you’ll have the security of knowing you can withdraw your money early, without penalties, if anything changes.

Click here if you'd like to learn more about Kiwi Wealth's Managed Funds.


Tags: Investment Basics, Managed Funds

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