Nikita Trainin

Nikita Trainin

Financial Adviser

9 Mistakes to Avoid When Joining KiwiSaver Scheme

The KiwiSaver scheme is a great way for New Zealanders to save for their retirement. With employer and government contributions, it’s an easy way to get your savings on the right track. However, if you’re not careful, some common mistakes can cost you thousands in the long run. Here are nine of the most common mistakes people make when joining the KiwiSaver scheme.


Mistake #1: Not Shopping Around For Funds

When signing up for a KiwiSaver scheme, it’s important to do your research and shop around for funds. Not all funds are created equal. Some offer higher returns than others, while some have higher fees. It’s important to compare funds before making a decision. Make sure you read up on the fund’s performance, fees, and risk profile so that you can make an informed decision about which fund is right for you.


Mistake #2: Failing To Review Your Savings Regularly

Once you’ve chosen a fund and set up your KiwiSaver account, it’s easy to forget about it and leave it alone until retirement age comes around. But this isn’t wise! You should review your savings regularly to make sure they’re still on track with your goals and objectives. Keep an eye out for any changes in market conditions that might affect the performance of your investments, as well as any changes in legislation or regulations that could affect your savings strategy.


Mistake #3: Not Taking Advantage Of Government Contributions

The Government offers several incentives for those who join the KiwiSaver scheme. These include contributions from employers and from the Government itself in the form of annual tax credits (up to $521 per year). It’s important to take advantage of these incentives if possible; otherwise, you’ll be missing out on free money! Make sure you understand how these incentives work and how much money they can save you over time so that you don’t miss out on them when joining a KiwiSaver scheme. 

Mistake #4: Not Knowing Your Investment Options

One of the biggest mistakes people make when signing up for KiwiSaver is not understanding their investment options. The type of fund you choose will determine how much risk you take on and how quickly your savings grow. Your age and finances should help guide which type of fund is best for you. Make sure to do your research and understand all of the different types of funds available before choosing one that fits your needs and goals.

Mistake #5: Not Paying Attention to Fees

Another mistake people make when signing up for Kiwisaver is not paying attention to fees associated with the various funds they’re investing in. These fees can add up over time, so you must understand what they are before making any decisions about which funds to invest in. Look beyond just the upfront costs; consider ongoing management fees, performance fees, exit fees, and other hidden costs as well.

Mistake #6: Not Understanding Your Risk Appetite

The most important part of joining a KiwiSaver scheme is understanding your investment options. There are 4 main types of investments available in a KiwiSaver plan. These include conservative funds, balanced funds, growth funds, and aggressive funds. Each one comes with its risk level and expected returns so it’s crucial that you research which one is best suited to your circumstances. For example, if you have a low-risk appetite then you will likely want to opt for the conservative fund option. On the other hand, if you have a higher risk appetite then choosing an aggressive fund may be more suitable for your goals.

Mistake #7: Not Knowing When You Can Access Your Funds

Another mistake that people often make when joining a KiwiSaver scheme is not understanding when they can access their funds. Generally speaking, members cannot access their money until they turn 65 or meet certain eligibility criteria such as purchasing a first home or experiencing serious financial hardship due to illness or injury. It’s important to be aware of these criteria so that you know what conditions must be met for you to withdraw your money from the scheme.

Mistake #8: Not Considering Additional Benefits

Another mistake people often make when joining a KiwiSaver scheme is not taking advantage of additional benefits such as employer contributions and government tax credits. Employer contributions are usually offered as an incentive by employers to encourage employees to join the scheme while government tax credits provide members with an extra boost on top of what they save themselves each year. Taking advantage of these additional benefits can help maximize your returns over time so it pays off to look into them before signing up for a KiwiSaver plan.

Mistake #9 Not Having a Financial Plan

Another mistake people make when signing up for Kiwisaver is not having a plan in place for where their money should go once it’s invested. Before investing, create a budget and decide how much money should be allocated towards each fund based on your desired level of risk and return rate. A good rule of thumb is to start conservatively with more conservative investments until you become more comfortable with taking on greater risks as needed. 

Joining the Kiwisaver scheme can be a great way to save for retirement and build your financial future—but only if done correctly!

This process doesn’t need to be daunting! The qualified Financial Adviser should be able to help you to navigate available options and avoid common mistakes in the process. Whether you are about to join KiwiSaver or are already in the scheme, it is never too late to ask for the help of a registered financial adviser who will be able to help achieve financial security in retirement tailored to your situation. Please contact me to have a chat.

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