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Keep calm in Covid-19 - investing tips for KiwiSaver

May 8, 2020



Covid-19 has turned normal life upside down for many.  If you’re feeling a little unsettled about investments like KiwiSaver these tips might help.

grace

DO

1. Keep calm and carry on 
Covid-19 was a shock to life as we know it – including the stockmarket.  Seeing a sudden drop in the balance of investments like KiwiSaver created a sense of panic for many.  Totally understandable but remember market ups and downs are actually normal over the long term.  Life will carry on and so will your KiwiSaver.  Invest for the long term and stick with it.

2. Set goals and have a plan
As Covid-19 has shown, you can’t predict the future, but you can have a plan.  If you haven’t already, set some goals.  What things do you want in life and what’s your timeframe for reaching them?  If you already have goals it might pay to reassess them in light of Covid-19.  Maybe it’s buying your first home which could be closer, or an overseas trip which is further away but still on the cards? Know your goals so you can plan with a sense of purpose.

3. Pick your moments for change 
If you are already investing a regular amount in the sharemarkets through your KiwiSaver or other fund, you shouldn't plan to make changes when volatility hits - like now. Overreacting to the ups and downs of the market now might stop you from achieving your goals.  Stay the course.

DON'T

1. Chop and change by switching funds
It’s hard to know how long the Covid-19 crisis will last and what it means for the local and global economy. As a result, the markets are likely to continue to swing back and forth with some big highs and sudden lows.  Resist the temptation to respond to the volatility by switching your KiwiSaver between growth, balanced and conservative.  Chances are you’ll lock in the losses and miss out on the gains.

2. Stop and start contributions
Covid-19 has put a strain on many household budgets.  If you’re tempted to reduce or stop your KiwiSaver contributions altogether weigh up the pros and cons carefully.  Investing is a regular habit worth sticking to if you can.  Short term money in your pocket now could affect your life in retirement further down the track.

3. Miss out on free money
If you’re not already taking advantage of the government’s annual contribution of $521.43 towards your KiwiSaver investment then check it out. If you meet the conditions, including putting in at least $1,042.86 before June 30 you will get the full contribution.

Tags: KiwiSaver, Investment Basics

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