What to know when you’re trying to pick the best KiwiSaver

About 10 per cent of New Zealanders are in a default KiwiSaver fund, which may not be the best option.

Each week BusinessDesk and the NZ Herald’s Cooking the Books podcast tackles a different money problem. Today, it’s how to find the best options for a wealthy retirement. Hosted by Frances Cook.

After a year of rocketing ups and downs for KiwiSaver funds, many New Zealanders are wondering if they should switch funds.

But one expert is warning to take a longer view when deciding if you’re happy with your fund, and whether you should switch.

Talking on the Cooking the Books podcast, Canstar’s Bruce Pitchers said while many companies could have a good year of high returns, or face a bad run when the economy wasn’t doing well, what mattered more was looking at their performance over a longer period of time.

“You look at returns, how much it’s making, but not in the short term. You need to look at the consistency of performance. Especially over the last five years,” he said on Cooking the Books.

“KiwiSaver basically should be regarded as a long-term investment.

“It’s like standing in the supermarket and you pick a queue. Then you see the one on the left going faster, and you want to jump over and get into that one. But as soon as you do that, the other one will start moving faster.”

Canstar’s KiwiSaver comparison tool https://www.canstar.co.nz/kiwisaver/ is one way of taking this longer-term view, and also shows which funds have recently won an award.

The Sorted Fund Finder was another simple way to compare funds, while the Sorted Smart Investor allowed more detailed comparisons.

Pitchers also advised keeping an eye on what features the fund has, as this could make it easier to check in on whether you were still happy with your fund performance.

“[Features] includes the range of investment options, can you mix and match, which is really important if you want to maximise returns. Also the tools and support.

“I mean, my KiwiSaver provider has a great app, it’s fantastic. My wife is with a different KiwiSaver provider, and she’s able to access that through her regular banking website.

“If you want to keep track of your KiwiSaver, having the tools there [to do it] is really important.”

Pitchers said another way to sift through KiwiSaver funds was checking the fees and overall charges.

After pressure from the Financial Markets Authority for the industry to reduce fees, costs had reduced in recent years, but there were still some charging a lot, while not delivering great results.

For the full interview on what you should know about your KiwiSaver, listen to the Cooking the Books podcast here.

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• Listen to the full interview on the Cooking the Books podcast. You can subscribe on iHeartRadio, Apple Podcasts, or Spotify.