KiwiSavers should ride out market storm
Taylor said all that advice made sense, provided the member was in the right fund for their goals and circumstances.
“It’s true you shouldn’t panic. But while it’s on your mind, and even with the market wobbling in the background, why not take the opportunity to look carefully at your fund and make sure it sits well with you, who you are and where you’re headed?”
Taylor said members should check out the mix of growth and income assets in their KiwiSaver fund.
“Growth comes with more risk but can also achieve greater gains. Ask yourself, does that trade-off feel okay to you?
“Do you feel comfortable taking on more risk to achieve your retirement goals? Are you suited to the swells and dips (how are you feeling now — a bit queasy but okay? Or is your concern a bit deeper)?”
Taylor said some members may prefer more certainty.
“If that’s you, consider a less growth-heavy mix, such as a wellstructured balanced fund. Here, your money is at least partly shielded in crises, by your fund comprising income-producing assets which typically do better in downturns.
“And if you are still a long way from retirement, the portion of your investment in growth (which typically does well in the period after a downturn) has more time to recover from market shocks, if they come.”
Taylor said it was also a good time to question whether you are with the right fund manager by asking your provider about what they are doing about the markets and how they coped with the downturn during the global financial crisis or the more recent downturn in the markets in February this year.
“We don’t know if what’s happening now is a proper hurricane or a squall.
“And we don’t know when the next bad weather might sweep through markets.
“But either way, your KiwiSaver provider should be your beacon in the storm — not the albatross around your neck.”