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Here’s what to do if your KiwiSaver balance drops

From time to time, share markets go through periods of volatility. International and local economic factors, as well as investor confidence, can cause swings in the value of shares.

This can be a little disconcerting if you’re not used to seeing this sort of movement, but it’s nothing to worry about when you’re investing for the long term.

If your KiwiSaver balance has dropped lately, there are a few things you might want to do.

Take a breath

First up, try to stay calm. People in KiwiSaver are saving either for retirement or a first-home deposit. Usually, it’s not money you need next week, so what your balance does today or tomorrow, or even next month, may be pretty much irrelevant. 

Have you been happy with how your fund manager has performed over the time you’ve been invested with them? Then, keeping your eyes on the long-term prize and remembering why you’re investing will give you some perspective. It’s also a good idea to stop checking your balance for a while. In most cases, once a year or every two years is enough to check how you’re tracking and make adjustments as needed.

Think twice (or more) before switching

In times of market turbulence, it can be easy to let emotions get in the way – and that’s why it’s even more important to keep them at bay. If you’re considering moving your KiwiSaver to a more conservative fund, keep in mind that this might stop your balance dropping as far right now, but it won’t help it recover. 

When you shift from a more aggressive fund to a more conservative one, you’re selling out of things like shares at a weaker point of the market. You no longer own them so you can’t ride the recovery when it comes. And this can mean lower returns overall. Sticking with the fund you have (provided it’s appropriate for your risk profile) means you might even own a few more investment units when things pick up again.

Check your risk profile

One of the most important factors in KiwiSaver success is being in the most appropriate fund for your risk profile. Not quite sure if you are? Get in touch, we can help you understand your attitude and tolerance for risk. 

Generally speaking, one of the things that affect your risk profile is how long you have until you need your money. Provided you’re confident with the level of risk you’ve chosen and focus on the long term, then short-term market movements matter a lot less.

Consider the gains you’ve made

Investment markets have had many years of strong returns. It’s likely that even if things are looking a little shaky right now, you’re still in a much better position for having invested in the first place. Remind yourself of the performance of your investment so far and the planning you’ve put in to get where you want to be.

Check in with us

One of the great things about having an adviser in your corner is that you have someone to talk to when things get a bit rocky. For example, we can remind you why you’re invested where you are and recommend some practical steps to stay the course. Hopefully, once you’ve had a check-in you’ll start feeling a lot more comfortable about volatility, now and into the future.

Like to talk?

Whether markets are going through a bumpy patch or not, we’re always happy to discuss your KiwiSaver and how it is working to help you meet your goals. Give us a call today to get your future on track.

 

 

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.

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