KiwiSaver – Recession?

Your investments and savings would likely have rebounded quite strongly this year as inflation and interest rates have begun to peak. New Zealand has entered a technical recession, what does this mean for your savings?

Last year was a seriously tough time for investors, with markets pricing in this recession. As we work through the tough times and start to grow again, your funds will also grow. That was certainly the experience of the Global financial crisis in 2008-2009.

Make sure your strategy is right

The best way to maximise returns, and minimise losses, is to ensure that your fund or KiwiSaver strategy matches your long-term financial goals. Whether balanced, aggressive or conservative, now is a good time to check in and make sure that your strategy is correct for your timeframes and needs. A methodical and reasoned strategy will make hundreds of thousands of dollars difference to your KiwiSaver balance over a long period.

Holding your strategy through tough times $1.4 billion was transferred by KiwiSaver members from aggressive and balanced funds into conservative funds in March 2020 due to the Covid panic. Because the recovery in April 2020 could not be predicted, those people effectively banked their losses. Those who held the course participated in the share market recovery that largely saw balances return to where they were, and then increase. The next 12 months will be volatile, get your long-term strategy correct and the short-term volatility becomes largely irrelevant. You are in a marathon, set your pace right, and don’t check your time over the first 100 metres.

Mark Sheehan is an awardwinning certified financial planner and licensed authorised advisor offering impartial advice in Nelson since 2008.

03 545 8928 sheehanfinancial.co.nz Advice is of a general nature and should not be considered personalised advice.