Saved money over lockdown? Here’s how you could make the most of it.
Are you an accidental lockdown saver?
If you didn’t have a drop in income over lockdown, you may have found that cutting your spending on extras like coffee with friends, buying your lunch, Uber Eats, petrol top-ups and frequent trips to the supermarket has given you an unexpected nest egg.
Retail spending over level 4 of lockdown was about half what it was over the same time in 2019, according to payments company Paymark.
Other Kiwis have found themselves with redundancy payments, and want to make their money work hard until it’s needed.
So what could you do with your unexpected lump sum?
Tackling debt – and then what?
It usually makes sense to start by paying down your credit card or any other debts. Paying a lump sum against your mortgage can also have a significant benefit in terms of long-term savings on interest.
Then it might be time to think about investing to grow your money to help you achieve your life goals further down the track.
Whether you have $100 or $10,000, there’s an investment type that could be right for you.
When the future is uncertain, investments with flexibility have extra appeal. Managed funds are one way to get all the benefits of investing without being locked into a set timeframe.
Choosing flexible investing
When you open an account with a managed fund, your money is pooled with other investors’ money and invested by a professional fund manager.
Each fund is invested in a different mix of assets, for example, cash, fixed interest, shares and other growth investments. You choose your fund depending on how long you have to invest for, what your goals are and how comfortable you are with risk.
While KiwiSaver is one type of managed funds, generally you’re not able to access your KiwiSaver money till you buy your first home or reach 65.
But with Kiwi Wealth Managed Funds, you can invest as much as you want to and access your fund when you choose to – without penalties. You can make regular investments or regular withdrawals.
Investing for as little as $100
You can open a managed fund account with Kiwi Wealth for just $100, but having a lump sum to invest gives you a head start.
That’s especially true if you came out of lockdown with a newfound savings habit as well as a lump sum. Money needs time to grow, so regularly drip-feeding small amounts of cash into your account – regardless of whether the market is up or down – is a smart way to build your wealth.
Managed funds are an easy, convenient investment that's a good option for beginner investors.
You can choose your goal – it might be retiring early, giving you and your whānau a safety net, or having an amazing overseas trip when the borders reopen. You can even open multiple accounts for multiple goals.
Kiwi Wealth Managed Funds invest your money globally as well as spreading it across different assets and sectors. While there are no guarantees with investing, the aim of diversifying is that if one area you’re investing in isn’t doing well, the others can help balance out the risk.