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Fund fundamentals: managed funds and KiwiSaver

April 19, 2021



KiwiSaver changed the way New Zealanders save for our retirement. If you’re an employee – or a self-employed person who’s chosen to – you’re probably putting away 3% or more of your salary into a KiwiSaver scheme. But what is a KiwiSaver scheme, exactly, and how does it compare to a managed fund?

Short answer: a KiwiSaver scheme is a type of managed fund, just one with a few more rules around contributing and withdrawing. (See the table below for the ins and outs.)

KiwiSaver is a great way to save for your retirement. But if you want to invest over and above what you put into your KiwiSaver account, or if you want an investment you can access at any time, a Kiwi Wealth Managed Fund is worth considering.

Depending on your investment goals, it might not be a question of “either-or”, but “why not both?”.

If you have questions after reading the table, hit Live Chat and we’ll be happy to help.

  Kiwi Wealth Managed Funds Kiwi Wealth KiwiSaver Scheme
Purpose Managed Funds are an investment option similar to a KiwiSaver scheme, but with the flexibility to have multiple accounts, and invest and withdraw when you like. KiwiSaver is a voluntary savings scheme to help you save for retirement. A KiwiSaver scheme is a type of managed fund that has some extra benefits and rules.
Withdrawals

Not locked in. Access your money when you need it.

Generally locked in until you’re 65. Unless you’re making certain permitted withdrawals (like a first home withdrawal, for example).
Returns

Your balance will move up and down based on the markets.

No limit on the potential returns, but likely to generate a higher return than term deposits over the long term.

Take a long term view - if you make a withdrawal in the short term, you could get back less than what you invested.

Your balance will move up and down based on the markets.

No limit on the potential returns, but likely to generate a higher return than term deposits over the long term.

You could get less back than what you invested, particularly if you were eligible and made a withdrawal in the short term.

Your contributions

Only need $100 to start investing.

You choose how much and how often to contribute.

As an employee you contribute at least 3% of your salary or wages.

If you’re self employed, you choose how much you contribute.

Make voluntary contributions whenever you like.
Employer contributions No employer contributions. As long as you’re contributing 3% of your gross salary or wages, your employer will also contribute 3%.
Government contributions No Government contributions. Up to $521.43 per year if you’re aged between 18 and 65.
Fees An annual management fee applies
0.73% - 1.03% per year based on your choice of fund.

A buy/sell spread also applies to cover the cost of buying/selling investments.
An annual management fee applies. 0.45% to 1.10% per year based on your choice of fund.
Diversification Our Growth, Balanced and Conservative funds are invested across a wide range of investments such as shares and other growth assets, fixed interest and cash. Our Growth, Balanced, Conservative and Default funds are invested across a wide range of investments such as shares and other growth assets, fixed interest and cash.
Professionally invested on your behalf Actively managed by experienced investment professionals who make the tough decisions, so you don’t have to. Actively managed by experienced investment professionals who make the tough decisions, so you don’t have to.
Funds to suit your needs 3 options to choose from:
• Conservative
• Balanced
• Growth
5 options to choose from:
• Cash
• Default
• Conservative
• Balanced
• Growth

 

Want to learn more?

Find out how you can wake up your money with a Kiwi Wealth Managed Fund or subscribe to our five part email series where we bust some of the myths around investing.

Tags: KiwiSaver, Managed Funds

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