How to Get the Best Bang for Your Buck with KiwiSaver

Every year, the New Zealand government will give you $521.43 for free. There are some conditions, but if you aren’t taking advantage of this, here’s how to get your free money!

The good news is that the government will give you $521.43kiwisa, for free, every year. However, the money has to go into the KiwiSaver, and you have to contributed at least $1042.86 yourself. Now is the perfect time to sit down and do some financial planning for next year’s KiwiSaver contribution to make sure you don’t miss out!

The Rules for KiwiSaver Government Contributions

The Government will contribute $0.50 to the KiwiSaver for every $1 you contribute, up to a maximum of $521.43. This is effectively free money, and an excellent way to save a bit more for your retirement or your first home deposit. So at a minimum, you must contribute $1042.86 between 1 July 2018 and 30 June 2019 in order to receive the full allocation from the Government. The money must be received into the KiwiSaver account by 27 June 2019, as the cut-off date for the financial year is 30 June 2019.

You must also be at least 18 years old, mainly reside in New Zealand, andnot yet making retirement withdrawals.

How Do You Know You Will Get the KiwiSaver Government Contributions?

If you have a KiwiSaver account and have earned at least $34,762 in the last year with the minimum 3% contribution, you have already contributed enough. You can check your totals via the IRD ‘My KiwiSaver’ site or your investment provider.

If you haven’t contributed enough, you can make a lump sum payment to get you up to that amount. This is worth looking into, especially if there is only a small shortfall. It might only be $10 or $20 to get you up to the minimum requirement.

Financial Planning Doesn’t Have to be Hard

Whether you’re planning to use KiwiSaver for a first home deposit or your retirement savings, you want to make sure you’re saving as much as possible. It’s time to sit down and do some financial planning. What is your goal for having a KiwiSaver account? How much money do you need for a first home deposit or retirement? If you are unsure on any of this information, then it might be time to call in the professionals. A financial planner will help you estimate how much you need and if you’re on target to achieve that goal.

Set Up Savings You Can’t Cheat

You’re only human,  so it can be tempting to dip into your savings sometimes. This is why KiwiSaver is great – you cannot access it!

Having the lowest rate of contributions can also be tempting, freeing up cash for your day-to-day living. However, if you’re serious about meeting a KiwiSaver target, you can increase your contribution rate from 3%, to 4% or even 8%. Simply fill out this form and pass it on to your employer.

You can also set voluntary contributions from your bank account to the IRD. Speak to your bank about this.

What If You Aren’t A Member of KiwiSaver?

Why have you not signed up? It’s a simple step that means you are saving automatically. Approach your employer for the relevant form and from the next pay period, a KiwiSaver account will be started. As well as the KiwiSaver Government contributions, your employer will also make contributions, making KiwiSaver an obvious choice for retirement savings.

If you’re self-employed you’ll need to join directly with a KiwiSaver provider of your choice by requesting a product disclosure statement and completing an enrollment form. Note: you’re not required to contribute a percentage of your pay. Instead, you agree to your contribution level with the KiwiSaver provider who may have minimum contribution requirements of their own.

What Kind of Investment Strategy is Right for You?

There are three main types of investment strategies in KiwiSaver. You can pick low, medium, or high risk. A financial adviser can help you decide what is best for you, but as a rule of thumb, low risk means low but steady returns, high risk offers the opportunity for big gains- and losses. The medium risk offers a blend of low and higher risk investments, offering a mid-point.

At this point, you may also want to think about the ethics of your investments. Depending on who your investment provider is, there can be a range of shares they invest in. Oil and fossil fuels, weapon trading, pornography, tobacco, alcohol and gambling are all common investments, often hidden in ethical-sounding wrappers. Four of the nine default providers still invest in companies that make nuclear weapons, cluster bombs, and mines.

Choose a KiwiSaver Provider

This is why it’s so important to choose the right scheme provider. This is a list of all the providers in NZ. How do you choose the right one? If you don’t choose one, IRD allocate you to a default provider, but it’s simple enough to change it later although the provider may charge you a fee for changing.

You can conduct research into each provider and make decisions based upon their past performance of their funds and the types of investments they make. If you’re not confident and don’t really know what you’re looking for, then give your investment adviser a call. They can advise you on who they recommend based on their knowledge and research. Remember, it is their job to know this information, and they will be able to listen to your concerns and match you with an appropriate provider.

How a Financial Planner Can Help You With KiwiSaver

A good financial planner will be able to help you join KiwiSaver, select the right fund and determine the best level of contributions to reach your goals. They will also be able to help you assess the performance of your investment and assist you to make changes if necessary. A good financial planner will also be able to help you make sense of the information KiwiSaver providers are required to send to you.

KiwiSaver is the easiest way to start your journey as an investor and with the ability to earn a free $521.43 each year, it’s a great way to save for your first home or retirement.