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Managed Funds vs Bonus Bonds

September 1, 2020



After 50 years ANZ Bonus Bonds are winding up – here’s why it’s worth having a go with managed funds instead.

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If you’re feeling caught out by the news that after 50 years, ANZ is winding up the Bonus Bonds scheme later this year, you’re not alone. NZ Herald reported how the Bonus Bonds website crashed as investors rushed to cash in While it’s the end of an era for Bonus Bonds it could actually be the start of a new, smarter investing journey for you. Here’s why.

Unlike Bonus Bonds, managed funds are less about luck and more about planning and putting your money to work to help you reach your goals.

Here’s 4 reasons why we reckon our managed funds stack up as a smart alternative to Bonus Bonds.

1. Investment vs lottery – how much are the returns?

While no investment is guaranteed, a good investment should offer a good chance of a return and a fair reward for the risk. We see it as less about luck and more about management. With managed funds your savings are put to work by a team of investment experts. Although the value of your investment will go up and down with the markets, there is real potential to grow your money with time.

In contrast Bonus Bonds are similar to a lottery ticket. Luck has everything to do with it. Instead of earning interest or receiving investment gains or losses, you only get the chance to win cash prizes each month. And the odds of winning aren’t good. The prize pool has shrunk so significantly that a 2019 analysis gave each dollar a one-in-3.4 billion chance of winning the million dollar prize.

2. Accessible – how flexible are the terms?

Our managed funds are designed with flexibility in mind – once you’ve started with your initial $100 investment, you choose how much you want to invest, how often you contribute and when you want to make a withdrawal – all without penalties.

There’s no doubt Bonus Bonds offered good flexibility too – you could purchase bonds and cash up when you needed to. Maybe that’s what attracted you in the first place. Good news is our managed funds offer you that too.

3. Time is money – how long do you have to invest?

When it comes to growing your savings, the sooner you start the better. With Kiwi Wealth Managed Funds your savings are put to work right away by investing your money in the next weekly pricing cycle after we receive your investment. Given the markets go up and down, the longer you keep your investment the better, as markets generally trend upwards over time. You can choose between three different options according to your timeframe and risk appetite.

Bonus Bonds enabled you to invest as long as you liked to wait for that chance magic win (and return). But you could still be waiting with little or even nothing to show for it years down the track. In addition each bonus bond you purchased had to be held for a least a month before being in to win for a prize draw.

4. Options vs all your eggs in one basket?

With Kiwi Wealth Managed Funds your investment is diversified by being invested across different assets, such as cash, fixed interest and international shares. That helps spread the risk.
In contrast Bonus Bonds were invested in just a few assets – cash and fixed interest. More of a put all your eggs in one basket approach.

If you’re serious about growing your wealth or giving your loved ones a head start, managed funds can help enable you to take control of your investment rather than leave it to luck. Explore how Kiwi Wealth Managed Funds can help you reach your goals here.

Tags: Investing, Managed Funds

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