It's always wise to look ahead when it comes to wealth, and many New Zealanders have chosen the government-backed KiwiSaver to be their nest egg. With approximately 2.6 million Kiwis a part of the scheme this year according to the KiwiSaver website, one would hope that people are getting the most out of their savings now. But many people still don't know just how to take advantage of their KiwiSaver fund, or even worse, end up losing more money than they gain.

Whether you're saving for retirement or for your first home, there are certain things you should always do while managing your Kiwisaver.

GREAT SPOTTED KIWI Wise Kiwis know to root around to find out how best to manage their KiwiSaver.

Getting beyond the default

There are some people who choose to join KiwiSaver but then never go any further than that. They pay their contributions and watch the value tick up over the years, but don't realise that the default scheme they have been placed into automatically has very little risk, and thus very few returns.

That may be okay for many who prefer a defensive scheme, but for those who want a little bit more bang for their buck and are happy to accept some risk, one of the other funds may be more appropriate.

Passive aggression

Being careful with your money is admirable, but even a retirement fund could sometimes do with a little risk.

From defensive to balanced to aggressive, the five funds available suit all different kinds of people. People who don't want to withdraw for a long time and want high returns but are happy with some loss every so often would do well to invest in an aggressive fund. This type of fund typically deals with property investment and shares.

This is only for those with nerves of steel, however, as they can suffer serious gains one year and big losses the next. You would have to deal with these drops for up to ten years to get the most out of an aggressive scheme, so be sure you are ready for it!

Cautious folks or those who are going to be withdrawing soon (perhaps for a new home) would do better to go with conservative funding options. But people who are too cautious can end up actually losing buying power as their funds don't grow at the same rate of inflation. Being careful with your money is admirable, but even a retirement fund could sometimes do with a little risk.

Ignorance is not bliss

What is important that you are aware of the pros and cons of each and pick the one most suitable for you. Personal research is a good place to start, but talking to a dedicated financial advisor or fund manager can be even more valuable.

Here's to your financial independence!

Daniel Carney
Authorised Financial Adviser / Investment Property Expert

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