Should I be investing in something other than KiwiSaver?

Investing is different to your everyday savings account. It can be tricky knowing how much to save for a rainy day, and how much to invest for the future.

3 minute read

The first thing to think about when looking into saving or investing, is what the money will be used for, and how easy it is to access.

For anyone looking to put away money for a big-ticket item, or a ‘just in case’ moment, saving could be your best option, while investing could be better for those with longer-term goals.

When to save

Saving lets you grow your balance in a simple way, while giving you access to your money as soon as you need it. When choosing a savings account, it’s important to think about how often you’ll want or need to dip into your savings. That’s because the type of account you select will affect how often you can access your money without being penalised, and the potential interest you could earn.

The investing difference

Investing could offer a better potential rate of return than a traditional savings account, but it’s important to know it also carries more risk. When you invest, you buy assets like shares, bonds, property, or managed funds (which often include a mix of all these things) with the expectation that the value of those assets will increase over time.

Before you think about investing, it’s important to make sure you have some rainy-day savings set aside for easy access should you need it. After all, if you have to take out money tied up in an investment when the market is having a downturn, you may experience a loss. Once you’ve got a good level of savings, you could look at investing as a way to grow your wealth in the longer term.

Investing in KiwiSaver makes sense for a whole lot of reasons

If you’re looking to avoid temptation and lock your money away to buy your first home, or save for retirement – or both – KiwiSaver could be a great option.

It’s important to know, KiwiSaver isn’t a one-size-fits-all – there are a range of KiwiSaver scheme providers, each with different investment funds, and you can choose which type of fund is best for you. This will depend on when you’ll need to access the money, and the level of risk you’re willing to take.

The good news is, most eligible KiwiSaver members also get the benefit of compulsory employer contributions, as well as the Government contribution.

Why a managed fund could also work for you

If you have investment goals on top of retirement that mean you need to access the money earlier, like planning for your kids’ education or simply wanting to grow your wealth, you might want to consider investing in a managed fund, alongside your KiwiSaver account.

Just like KiwiSaver, your money is generally pooled with other people’s, and invested by an expert fund manager. There are multiple fund options so you can choose the best fund for your investment timeframe, and level of risk you’re willing to take.

Managed funds can also be easier to invest in than you think. Unlike KiwiSaver, the managed funds in BNZ’s YouWealth scheme don’t lock your money in. This gives you the added flexibility of being able to access your funds when you need them – before you turn 65.

With YouWealth, you can also set up regular deposits to help you stay on track towards your goals, and you can even view and manage your fund accounts alongside your other BNZ accounts.

If you get a lump sum, like an inheritance, a managed fund could help grow your wealth, while still giving you easy access to the money when you need it. You can even set up regular, ongoing withdrawals if you need to. Plus, when interest rates are low, depending on the fund you’re invested in, the overall returns will likely be higher than a savings account.

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This article is solely for information purposes and is not intended to be financial advice. If you need help, please contact BNZ or your financial adviser. Neither BNZ nor any person involved in this article accepts any liability for any direct or indirect loss or damage arising out of the use of, or reliance on, all or any part of the content.

BNZ Investment Services Limited, a wholly owned subsidiary of Harbour Asset Management Limited, is the Issuer and Manager of the BNZ KiwiSaver Scheme and YouWealth. Download a copy of the Product Disclosure Statements:

• BNZ KiwiSaver Scheme Product Disclosure Statement (PDF 1.1MB)
• YouWealth Product Disclosure Statement (PDF 1.4MB)

Investments in the BNZ KiwiSaver Scheme and YouWealth are not bank deposits or other liabilities of Bank of New Zealand (BNZ) or any other member of the National Australia Bank Limited group. They are subject to investment risk, including possible delays in repayment. You could get back less than the total contributed. No person (including the New Zealand Government) guarantees (either fully or in part) the performance or returns of the BNZ KiwiSaver Scheme or YouWealth, or the repayment of amounts contributed. National Australia Bank Limited, the ultimate owner of BNZ, is not a registered bank in New Zealand but a licensed bank in Australia and is not authorised to offer the products and services mentioned on this webpage to customers in New Zealand.

BNZ Investment Services Limited (BNZISL) uses the BNZ brand under licence from Bank of New Zealand, whose ultimate parent company is National Australia Bank Limited. No member of the FirstCape group (including BNZISL) is a member of the NAB group of companies (NAB Group). No member of the NAB Group (including Bank of New Zealand) guarantees, or supports, the performance of any member of FirstCape group’s obligations to any party.