If you’re like many people, statements are just one more task that you can’t be bothered with or they stay on the to-do pile until the next statement arrives. But there are some good reasons to check your KiwiSaver statement carefully when it arrives – here, we have outlined five things to look for or check.
Know the fees you have been charged
Fees can quickly eat into the gains you have made – especially if you are only making minimum contributions each year.
Fees vary quite significantly between different fund managers, and also across the different types of funds themselves. For example, investments in growth funds generally will have higher fees than more conservative funds – often because the growth funds require more management – and will also generally provide a better return over time, meaning your balance is growing at a better rate than if it was in a conservative fund.
Regulations require your KiwiSaver provider to clearly set out the fees charged in your statement – and these need to be shown as a dollar figure, rather than just a percentage.
Is your fund growing?
Check your statement each time you receive it, to make sure your balance is going up rather than down.
Having said that, don’t forget that markets do go up and down, so if you want to avoid unnecessary worry, checking your KiwiSaver balance every day may not be a good idea. Markets fluctuate on a daily basis, and while you may see a reduction in your balance one day, it may well increase again the following day.
KiwiSaver is a long-term investment, and you are looking for growth in your investment over a period of years, not day-to-day or even month-to-month.
Check the fund you are in
It is well documented that when you have a long investment timeframe, having your investments in growth funds will generally provide you with the best returns over time. You do, however, need to ensure that the ‘risk’ you are taking with your retirement fund still lets you sleep at night.
Complete a risk profile to understand your own tolerance to risk and volatility, and check that you are in a fund that will give you the best chance of a good return, within your own risk profile.
Check all your deductions or other payments have been credited
While it may be easy to think that, with everything happening electronically these days, all your deposits will just magically go through (and they usually do), it’s still a good idea to check carefully. Make sure all your contributions, or manual payments, have been credited, as well as your employer contributions and the Government contribution are showing.
Are you on the right tax rate?
Lastly, make sure you are not paying too much tax – at least on your KiwiSaver returns. The tax rates are variable, ranging between 10.5% and 28% and your rate is based on your income over the last two years. If you haven’t told your provider what tax rate you should be on, you will automatically pay at the highest rate – eating into your valuable retirement fund.
KiwiSaver is a set-and-forget investment in a lot of ways, especially if your contributions are being deducted directly from your salary or wage. But if you want to have a comfortable, rather than budget retirement, keep an eye on KiwiSaver and make sure you are maximising your retirement fund.
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