Q&A
Managing your investments during COVID-19 — help from an expert.
HOW LONG WILL THIS DOWNTURN LAST?
It’s very hard to say because COVID-19 is unprecedented. But we do know that share markets are forward-looking. They tend to go down before a recession starts and begin recovering before the recession ends.
MY KIWISAVER BALANCE HAS FALLEN DUE TO COVID-19 – SHOULD I CONTINUE ADDING TO IT?
If you can still afford to contribute, then it could be a good idea to continue for two reasons. Firstly, share prices have fallen. So, you’re now getting more for your money when you contribute – think of it like a Boxing Day sale for your KiwiSaver. Secondly, when you contribute through your wages, your employer and the government also chip in. But if you stop contributing, you’ll miss out on this free money.
WHEN SHOULD I EXPECT MY KIWISAVER BALANCE TO RECOVER?
This depends on the type of fund you’re in (e.g. conservative or growth) and how well your KiwiSaver provider performs. Generally, if your balance has fallen a lot it can take months or even years to fully recover. This can be difficult to accept, but these ups and downs are part of investing. The good news is by continuing to contribute, you’re benefitting from buying shares ‘on sale’ and this should help boost your returns over the long term.