Financial advice guru Mary Holm wants people to focus on fees over returns for KiwiSaver. Photo / Babiche Martens
One of the country’s foremost KiwiSaver experts is encouraging investors to focus almost entirely on one thing when choosing their provider – fees, rather than returns.
Finance columnist, author and speaker Mary Holm told Nadine Higgins on The Prosperity Project podcast that paying more doesn’t mean you get more.
“People say, ‘well, if you pay more for something, you tend to get something better’. But really in managed funds, including KiwiSaver, that doesn’t necessarily happen.”
In fact, she says the research shows the generic warning ‘past performance is not a guarantee of future performance’ is one that investors should take seriously.
“Very often, the ones that did well in one period, then they tend to be more likely than by chance to do badly next time around, and the ones that did badly are quite likely to do well the next time around.”
Modelling in the revised and updated edition of Holm’s book Rich Enough? shows the impact of low fees versus high fees on how much you’ll have invested after 40 years can be hundreds of thousands of dollars.
Holm cites advice from legendary US investor, Warren Buffet, who wrote: “Performance comes, performances goes. Fees never falter... both large and small investors should stick with low-cost index funds”.
Many investors in KiwiSaver may currently be watching the performance of their funds suffer, as the introduction of sweeping US tariffs rocks share markets around the world.
Holm says if that volatility scares you, try to stay put for now, even if you reassess your risk tolerance later.
“If there is a downturn and you learn from that, that you can’t cope with volatility as much as you thought you could, if you can just hang in there for a while because markets that go down suddenly quite often recover quite fast.”
Listen to the full episode of The Prosperity Project for more on how to make the most of your KiwiSaver - include why you should make it difficult to see how much is in your balance.
The podcast is hosted by Nadine Higgins, an experienced broadcaster and a financial adviser at Enable Me.
A revised version of Mary Holm’s book, Rich Enough?, is in stores now.
You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts. New episodes are released every Monday.
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