Kiwisaver’s missing out of $thousands$
15% of those in kiwisaver are not making the most of kiwisaver and are missing out on thousands when it comes time to reap their harvest. That is because they are in default kiwisaver funds. What this means is that when you join the kiwisaver scheme you nominate which fund to join, growth, balance, or conservative but if you do not nominate wich fund to join then one will be chosen for you and that is always a conservative fund which has a return of 5% compared to 7%+ for other funds.
It is also important not to chop and change funds according to market conditions. Otherwise it can cost you in the long term.
The following table will give you an example of how much you could be missing out by not getting the most out of your savings.
Amount in kiwisaver 5% return 7% return
10,000 $500 $700
20,000 $1000 $1400
30,000 $1500 $2,100
40,000 $2000 $2,800
50,000 $2,500 $3,500
This difference takes place every single year so that by the time you reach retirement age the differences between how much you could have saved and how much you will actually get will be quite huge. There lies the beauty of compounding interest because your money has earned a return and this money is also working for you.
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