Latest / Making Cents / Simple KiwiSaver Mistakes That Cost You Thousands (And How To Fix Them)

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Simple KiwiSaver Mistakes That Cost You Thousands (And How To Fix Them) · Making Cents

• 0:00
  Kiwisaver has become one of the biggest financial weapons most of us have, and yet many of us aren't using it to its full potential.
• 0:08
  The money in there is getting bigger, the stakes are getting higher, but still so many of us have questions that are half answered or not answered at all.
• 0:17
  And unfortunately, not knowing those answers could mean missing out on tens of thousands, even hundreds of thousands of dollars.
• 0:26
  So I.
• 0:27
  I told you to send me your KiwiSaver questions and boy did you.
• 0:31
  Absolutely flooded my Instagram and Facebook with all sorts and I grouped them into the main areas of those questions and I have just the person to answer even the awkward ones.
• 0:41
  Susan Edmonds is one of our top personal finance journalists.
• 0:45
  She has beaten me to an award or two, but to be honest, there's no one else I'd be okay with losing to.
• 0:51
  And she's just released a book called you'd kiwisaver Questions Answered.
• 0:55
  I think a lot of people just think, I'm in KiwiSaver, it's doing its thing, I'm fine and like, Great, you're in KiwiSaver.
• 1:01
  That's excellent.
• 1:02
  But you need to every so often check in and make sure the settings are still right.
• 1:06
  Some of our unanswered questions are a little bit awkward, like what happens to it when you die?
• 1:13
  And can you even trust putting your money in there?
• 1:15
  I think it is likely that we're going to end up probably compulsory.
• 1:18
  We talk a lot about how we can't afford NZ super into the future and having more people who have more resources to rely on themselves as part of the answer to that.
• 1:27
  So welcome to Making Sense.
• 1:29
  It's the podcast people who want financial freedom without giving up their coffee.
• 1:33
  I'm Frances Cook, a financial journalist and fellow financial freedom seeker who makes money simple for you.
• 1:39
  Today, it is quite literally your KiwiSaver questions answered.
• 1:45
  This episode of Making Sense is brought to you in partnership with Odoo, the all in one business management platform that brings everything you need to run your business into one place, fully integrated and actually affordable.
• 1:58
  Go to odoo.com that's O D double O dot com for more.
• 2:02
  I want to help as many people as possible build a better life for themselves by understanding and taking control of their money.
• 2:09
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• 2:11
  First, make sure you're subscribed wherever you like to listen, whether it's YouTube, Apple Podcasts or Spotify.
• 2:18
  And then send your favorite episode to a mate.
• 2:21
  Then we can all level up with money together.
• 2:22
  The show grows And I can keep bringing you the money info that actually moves the dial.
• 2:28
  Right.
• 2:28
  Welcome in, Susan.
• 2:29
  I can't believe this is the first time I've had you in, because we chat all the time, see each other at things, and then here we go.
• 2:36
  You've got this great new book on KiwiSaver.
• 2:38
  I thought, perfect, we need to talk about it.
• 2:41
  KiwiSaver, I think, is one of those that has kind of snuck up on people.
• 2:44
  It has gotten a lot bigger.
• 2:47
  How big is KiwiSaver for the average person?
• 2:50
  I mean, for a long time we had people's homes, often their biggest asset.
• 2:54
  Kiwisaver's kind of sneaking up there.
• 2:56
  How does it compare?
• 2:57
  Yeah, I would say it's probably our second biggest asset for lots of people now, younger people, probably the biggest.
• 3:03
  But I think the most recent stats I saw showed that we were about $50,000 on an average balance, which it's probably less than the equity many people have in their homes, but it is pretty significant.
• 3:12
  We're coming up to 20 years of KiwiSaver now, and it is.
• 3:15
  I think we've had a good few years of pretty strong market returns, and I think they've compounded to something quite significant for quite a lot of people.
• 3:22
  And it's tricky when we're talking averages, right, because like, 50,000, there'd be some bigger, some smaller.
• 3:28
  Right?
• 3:28
  Definitely.
• 3:29
  So I think it was last year I went around a few providers and I asked them what their biggest balance was, and it got.
• 3:34
  Some of them had more than $2 million.
• 3:36
  So that would be quite a nice position to be.
• 3:38
  I'll take that.
• 3:39
  That'd be fun.
• 3:40
  I wouldn't have that one.
• 3:42
  Oh, they must be a very good earner or a very good saver.
• 3:46
  Yeah, that's right.
• 3:47
  But then on the other end, you hear of people who are getting quite low balances because they're probably making a withdrawal for hardship reasons.
• 3:53
  And I've heard people are coming back multiple times for hardship reasons.
• 3:57
  So that can.
• 3:58
  There's definitely both sides of the spectrum there.
• 4:00
  Definitely.
• 4:01
  Yeah.
• 4:01
  Okay.
• 4:02
  Well, let's start pretty broad, then.
• 4:04
  You've been obviously looking into this and researching extensively.
• 4:08
  What do you think is one of the big things a lot of people get wrong with their kiwisaver.
• 4:13
  I think there's probably two things, and they're sort of either side of a coin.
• 4:18
  So one is like obsessing about your balance and trying to do something about it every time you see it, doing something that you don't like and that can backfire on you because you might make a choice that turns
• 4:27
  out to not be the right one.
• 4:28
  With the benefit of hindsight, we saw that with COVID where a lot of people freaked out when their balances dropped and then they moved to conservative funds and missed out on the recovery.
• 4:36
  And then the other side of that is not thinking about it at all.
• 4:40
  I think a lot of people just think, I'm in KiwiSaver, it's doing its thing, I'm fine and like, great, you're in KiwiSaver, that's excellent.
• 4:47
  But you need to every so often check in and make sure the settings.
• 4:50
  Are still right 100%.
• 4:51
  I mean, I, before I got into the personal finance space, I'd kind of heard like, oh, you can have your KiwiSaver in different funds and you can do this and that and the other.
• 5:01
  And I was like, oh yeah, I should look at that at some point,.
• 5:05
  But I'm busy like most people are.
• 5:07
  Yeah, exactly.
• 5:08
  And at that point the default was always to put you in conservative.
• 5:11
  And when I looked at, I was actually better suited for growth at that point.
• 5:15
  And when I looked at just changing funds, no more money from me.
• 5:18
  It doubled my balance by retirement.
• 5:21
  Going from that conservative to a growth.
• 5:23
  And that was after several years being like, I should look at this.
• 5:28
  Imagine the difference.
• 5:28
  Just those few years, if I changed the settings, could have.
• 5:32
  So I do think, you know, there can often be this low hanging fruit that doesn't require much from you but can change things.
• 5:39
  What do you think is the best low hanging fruit for a lot of people when it comes to their Kiwi saver?
• 5:45
  I think it is what you've identified there.
• 5:47
  Making sure that you're in.
• 5:47
  Stole your thunder.
• 5:48
  I'm sorry.
• 5:48
  No, that's totally fine.
• 5:50
  Being in the right fund for your risk profile.
• 5:52
  So the longer you have until you want your money, the more risk you.
• 5:54
  You can generally take.
• 5:55
  I spoke to one woman who'd been stuck in a cash fund for more than a decade and had basically gone backwards during that time because inflation was eroding her balance.
• 6:05
  And so she could have done quite well over that time if she'd been in a growth fund.
• 6:09
  But she just didn't realize until too late really.
• 6:11
  And so it's that kind of checking in.
• 6:13
  Just make sure that your settings are right for your personal circumstances.
• 6:17
  And if you're not sure, just ask.
• 6:18
  Cause sometimes I think people do find it a little bit overwhelming and they don't really feel that confident.
• 6:23
  So ask your provider, am I in my settings?
• 6:26
  Right.
• 6:26
  For me, what should I change?
• 6:27
  What should I consider?
• 6:29
  Because you could also split your funds if you like, which can be a way to get a bit of a broader exposure, which might be right for some people.
• 6:36
  Exactly.
• 6:36
  I love that we're going to dive into that in a bit.
• 6:39
  But that has touched beautifully on a question that I got sent through here.
• 6:43
  Is there a place that lets you track all the KiwiSaver funds and is actually customer friendly?
• 6:49
  So what do you think?
• 6:50
  Is there an easy way for people to check those things out and have a little bit, little bit of a look on what might be best for them?
• 6:56
  Sorted has its fund finder, I think it's called, where you can compare a few different funds.
• 7:01
  And that's quite good for a sort of an in depth look.
• 7:03
  Yeah.
• 7:03
  And they make it quite easy.
• 7:05
  Right.
• 7:05
  Because they've got that little quiz where you can be asked about your life stage and all that sort of stuff.
• 7:09
  Because yes, there's a certain amount of personalization with KiwiSaver, but it often can fall into quite general categories.
• 7:17
  Are there sort of rules of thumb that you think people should be looking at when it comes to their KiwiSaver?
• 7:22
  How long am I going to be investing for?
• 7:23
  That's quite an important consideration.
• 7:25
  So generally we say when you're starting out, you've got time on your side.
• 7:29
  You might as well make the most of that by being as growthy as you can for as long as you can.
• 7:33
  And then as you get to the time where you might be buying a first home, you might want to scale it back a bit because do you remember during that Covid time we had people saying, oh, my balance
• 7:41
  is falling and I'm about to buy a house.
• 7:43
  You don't want to have that.
• 7:44
  So pull back your risk a bit then, and then dial it up again because you've still got quite a long time after you buy a house till you retire, probably.
• 7:52
  Yeah, well, related on that.
• 7:54
  The second part of that question was where can I go to find the best returns now?
• 7:59
  That's the million dollar question, right?
• 8:02
  Quite literally, yes.
• 8:04
  That's a very hard one to predict.
• 8:07
  I think the other thing is you've got to be careful about saving, saying that fund's done well the last three months, six months, one year or whatever, and jumping into that when it might have been a short term
• 8:16
  thing.
• 8:17
  So when people often say to me, should I change provider because I'm not getting the returns I want?
• 8:22
  I tend to say to them, you should try and look for a long Term return and then see how they're tracking over that period of time and compare them to their similar funds in the same sort of category.
• 8:32
  So don't compare your growth fund to an aggressive fund.
• 8:36
  You know, just try and compare like with like and over a long term to get an idea of how they're going.
• 8:41
  Yeah, because it's sort of.
• 8:43
  The fund finder is brilliant.
• 8:44
  They've also got the smart investor for people who want to go in a bit more depth and do things like compare those funds across.
• 8:51
  What do you think of that?
• 8:52
  Do you find it user friendly?
• 8:54
  I think it works if you know what you're looking for, which I think is sometimes the thing.
• 8:58
  People aren't quite sure what they're looking for when they go into that exercise.
• 9:02
  But I think it's.
• 9:02
  Yeah, if you start with a kind of a more basic tool and then work your way up, you'll probably be okay.
• 9:07
  Yeah.
• 9:08
  My thought would be fund finder, if you're doing this for the very first time and maybe smart investor, if you've been doing it a bit longer and want to get more nitty gritty, dig a bit deeper.
• 9:15
  Yeah, okay, cool.
• 9:16
  We've got some great questions here.
• 9:20
  One person sent in and said, could I get better returns investing my money myself?
• 9:25
  What do you think of that?
• 9:26
  That is a good question because, you know, we've got shares and things like that now, letting you do a bit of dabbling with your own kiwisaver money.
• 9:34
  My worry is always that we have limited evidence that even the fund managers can beat the market over the long term.
• 9:41
  So I am hesitant to think that the average person could do better.
• 9:45
  But I mean, maybe, maybe you have particularly.
• 9:48
  You have a particularly strong conviction about something and then that pays off.
• 9:52
  But yeah, I'd be wary, especially if it's a large sum of money that you're really dependent on.
• 9:57
  I would tend to think that's something you want expert input into.
• 10:01
  Yes, and we talk about things like you invest in what you know, but actually I got caught out with that a little while ago.
• 10:08
  I thought my sharesies haven't been doing very well compared to the market.
• 10:10
  And so I had a bit of a dick around and it was because I'd invested in the brands that I was familiar with, you know, like Air New Zealand, Anz.
• 10:17
  Anz did all right, I think, but you know, those big names and they hadn't all done that well.
• 10:21
  Whereas if I'd chucked my money in a global fund or something, I would have done a lot better.
• 10:25
  So there's something to be a bit wary about with that.
• 10:28
  Investing in what you know, I think.
• 10:30
  There is that real danger.
• 10:31
  Right.
• 10:31
  Especially as people get more knowledge and you see people do this all the time, people who know a lot about money and are like, actually, no, hang on.
• 10:38
  I've.
• 10:38
  I've, I've got this.
• 10:40
  I can get around this.
• 10:42
  Um, and you, you can fall into some of those traps where something really simple like a broad fund can be the best way to be investing and staying ahead and it's lazier and easier.
• 10:52
  And I think that we often think that that means, oh, I won't get as far.
• 10:56
  And yet for the most people, that's how you make the most money.
• 10:58
  And that's exactly the system that KiwiSaver is based on.
• 11:01
  That's right.
• 11:01
  When they say about getting better returns, investing my money myself, I also think in terms of your employer contribution, the money you get from the government, you would, at the very minimum, want to make sure you're getting those
• 11:14
  right.
• 11:14
  Cause that's free money you won't get elsewhere.
• 11:15
  Yes.
• 11:16
  I was assuming they were talking about investing their own KiwiSaver money, but you're right.
• 11:19
  Absolutely.
• 11:19
  If you're doing other investing on the side, you'd want to make sure you're getting at least the perks of KiwiSaver as well.
• 11:25
  Do you think it can ever be useful to sort of have a certain amount going to KiwiSaver and a certain amount outside of it, or bumping up extra contributions that should just go straight into KiwiSaver?
• 11:36
  Do you think there's, like, good times for maximizing your investing strategy overall and how you'd use KiwiSaver in that?
• 11:42
  Yeah, people do ask me that quite a bit.
• 11:44
  And I think it does depend on you as a person, because saving.
• 11:48
  Some people really need that aspect of having it taken out of their hands.
• 11:53
  And at least with KiwiSaver you increase your contribution.
• 11:55
  It happens.
• 11:56
  You don't have to do anything and you can't.
• 11:58
  It's quite hard to get it back once you've done it.
• 12:00
  Saves you from yourself.
• 12:01
  Yeah, yeah, that's right.
• 12:02
  So if you're someone who needs that, then that's something you should probably consider.
• 12:06
  But if you're a bit more disciplined, then there is no reason to be doing that Extra investing in KiwiSaver at the moment, because there aren't really any extra incentives.
• 12:14
  So you could set up a separate fund and manage it yourself.
• 12:17
  And as long as you know you're not going to delve in anytime you feel like it can work too.
• 12:22
  Yeah, yeah, exactly.
• 12:23
  Yeah.
• 12:23
  I think you make a really good point there in terms of if you have a bit more self control, get those kiwi saver minims.
• 12:30
  Awesome.
• 12:31
  And then go invest elsewhere.
• 12:33
  Cool.
• 12:33
  If you know that you need to be stopped, pulling that money back out, make use of the kiwisaver safeguards, put it in there and it'll stay because that's what you have to do.
• 12:45
  That's right, exactly.
• 12:49
  All right.
• 12:49
  What happens to your kiwisaver when you die?
• 12:52
  Oh, generally it just becomes part of your estate and that it's divided according to your will or if you don't have a will, the complicated rules about how it gets split.
• 13:01
  Yeah, that is the thing, actually, that I have talked to people about before, that people often need a will younger than they think to have.
• 13:09
  Because basically, if you have a kiwisaver, you should probably think about it because the default rules of what happens when you die, they can be different from what people expect.
• 13:19
  And it also takes longer.
• 13:21
  Yeah, that's right.
• 13:22
  There was a change relatively recently to probate.
• 13:25
  And if your balance, your Kiwisaver balance is below, I think it's $40,000.
• 13:29
  It used to be 15, but they increased it.
• 13:31
  It didn't have to go to probate.
• 13:32
  That kind of simplifies it a bit.
• 13:34
  But you're right that you've, you're still, you know, a pretty average balance.
• 13:37
  Before it becomes an issue.
• 13:38
  Get a will.
• 13:38
  It makes it easier.
• 13:39
  Yeah.
• 13:40
  It does not have to be expensive.
• 13:41
  Okay.
• 13:42
  What about divorce?
• 13:43
  What happens to your kiwisaver in the event of divorce?
• 13:45
  So kiwisaver is usually a relationship property asset.
• 13:49
  So the returns you got while you were together and you're.
• 13:54
  Yeah.
• 13:54
  Are usually something that is split when you split.
• 13:57
  But I find that people tend to just build it into their relationship property agreements rather than actually going, I'm going to take a chunk.
• 14:03
  They say, well, you've got, you know, you've got more than me and Kiwisaver, so I'll take more of this in the house or something like that.
• 14:08
  Because it's.
• 14:08
  Yeah.
• 14:09
  It's complicated to try and get the actual money out.
• 14:11
  So I think it's just something that people build into their conversations.
• 14:14
  But it is worth remembering that it is relationship property.
• 14:18
  Don't try and hide it.
• 14:19
  It will not work.
• 14:20
  No.
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• 15:51
  Right back to it.
• 15:52
  You mentioned earlier about the hardship withdrawals and I imagine that's what this person is referencing here.
• 15:59
  But we've had a question.
• 16:00
  Are they going to make it easier to withdraw funds?
• 16:04
  To which my first thought this might be idealistic.
• 16:06
  My first thought is do we want to make it easier to withdraw funds?
• 16:09
  But your thoughts?
• 16:11
  Well, that's my first thought too, because I don't think it's great that we seem to have got to this point where often people's first thought is can they get some money out of Kiwisaver when maybe they have other
• 16:20
  options?
• 16:21
  So I personally would not like to see it be much easier to take money out for hardship reasons.
• 16:27
  At the moment.
• 16:27
  I don't think that there's going to be a move to make it easier.
• 16:31
  But if we do go to compulsion, as various politicians have been talking about, I think it's something people will need to think about how those withdrawals work.
• 16:40
  Well, yeah, it's interesting there has been a lot more political focus on Kiwisaver recently.
• 16:46
  Run me through.
• 16:46
  Has there been anything that's caught your eye in terms of the things that they are talking about?
• 16:52
  Is there anything that seems more likely, less likely?
• 16:55
  And from Your point of view more or less interesting.
• 16:59
  I think it is likely that we're going to end up probably compulsory.
• 17:02
  There I go.
• 17:02
  They're hedging my.
• 17:03
  Probably, probably likely.
• 17:06
  I think it's likely that we're going to go to compulsion eventually because it seems that that is the way that the system is going.
• 17:12
  We talk a lot about how we can't afford NZ super into the future and having more people who have more resources to rely on themselves is part of the answer to that probably.
• 17:21
  So that makes sense to me that we'd push that way.
• 17:24
  I think that we're going to see higher contribution rates but I do think that will be an issue for some people because a lot of people have had quite a tough time in the past few years and I
• 17:33
  imagine being told they need to save more money might not feel great.
• 17:36
  So that will be something that we'll have to address as well.
• 17:39
  Yeah, yeah.
• 17:40
  And it's, it's interesting because it's parties, plenty of different types of politicians that are looking at these issues very seriously.
• 17:49
  So I think you're right in terms of the details might change but politicians from across the aisle are looking at these issues.
• 17:56
  What do you think?
• 17:57
  Do you think we'll end up as much as Australia?
• 18:00
  Because they're 12%, aren't they?
• 18:01
  They are 12%.
• 18:03
  We were talking about getting to 6 plus 6.
• 18:05
  Right.
• 18:05
  Which is 12%.
• 18:06
  I think the key difference is that in Australia it's the employer who's got the compulsion, not the employee.
• 18:12
  And I do think that's something we could think about is decoupling the contribution so that the worker could potentially stop contributing or contribute less and the employer would have to keep going, which I think would do something to
• 18:23
  fix a big problem that we have, which is that lower income people who struggle to be in Kiwisaver miss out completely.
• 18:30
  Whereas maybe there's a way that they could at least have something going into their accounts.
• 18:35
  Yeah, it's tricky, isn't it?
• 18:36
  When we do the percentage based from your pay automatically that means people with higher incomes end up with a higher balance.
• 18:44
  Do you think there's a fix for that?
• 18:45
  Do you think there's any appetite for whatever that fix might be?
• 18:49
  I don't think with the current system there is a fix for higher income people ending up with more because that is just the way it's set up really.
• 18:57
  But I do think we should do something more for the lower income people and that could be, could be splitting employer and employee contributions or maybe some more incentives because we really don't have many incentives to being in
• 19:07
  the scheme.
• 19:08
  You know, there's various tax incentives we could think about that would help boost balances or $260 a year from the government isn't a huge incentive, particularly for self employed people like yourself, you know.
• 19:19
  Yeah, exactly.
• 19:20
  And it just keeps getting stripped back which like I understand that they're trying not to spend too much government money like I get that.
• 19:27
  But at the same time everywhere else around the world has all of these incentives for whatever their own saving scheme is because it's cheaper overall to encourage people to save.
• 19:39
  But it's just, you know, what's cheap now versus what's cheap in the future I think is probably the issue there.
• 19:44
  I mean there have been lots of reports on how we could change up KiwiSaver and different things get picked up or not.
• 19:52
  If you had a magic wand and post the election, whoever comes in, whatever they were going to let you say, you know, there's one thing to Kiwisaver, Susan, we're going to let you bring it in.
• 20:04
  What do you think would be one big change to KiwiSaver that we could benefit from?
• 20:08
  I'd like us to see tax taken off our returns so that that could compound over someone's investing life and that would make quite a big difference.
• 20:15
  It would probably wouldn't be very popular with you know, people who receive the tax from government but I think it would be a good step and then I would like them to stop messing with it because I think
• 20:23
  it's so damaging to the confidence in the scheme when people think oh the government's gonna come and change the rules and we don't know what's happening.
• 20:29
  So make that change, get some incentives in there, think about the lower income people and then leave it alone.
• 20:34
  Yes, yes, well that fits in perfectly as well with actually another question that I got sent and I get this a lot.
• 20:41
  I'm worried the government will take my Kiwisaver money.
• 20:44
  I just really don't trust it.
• 20:45
  All we can say is that it's your money in the same way that money in the bank is your money, it's in your name, it's held in trust for you.
• 20:52
  At the Keelysaver Proprietor they have a supervisor that makes sure they're doing the right things.
• 20:57
  But the government can't delve into your KiwiSaver account any more than it could take some money out of your savings account at the bank.
• 21:02
  So it's not something that the government can just decide it wants a Bit.
• 21:06
  Of, yeah, yeah, a hundred percent.
• 21:08
  And the way I often describe it is the government might have set the rules of KiwiSaver, but they're not the ones who have your money, they're not managing your money.
• 21:16
  It's these private wealth management companies that are very regulated and checked on and so therefore they're not just going to be like, oh, we need to fund this highway and we're taking everyone's Kiwisavers for it.
• 21:28
  Like, good luck to you.
• 21:29
  That's right.
• 21:31
  And what do you think in terms of the trust IT aspect?
• 21:34
  I mean, the government can't actually take your money and then you say, you know, there's the wealth management companies and then people, I think have a.
• 21:43
  A different level of trust where they're like, oh, well, can I trust them?
• 21:47
  So what do you make in terms of the KiwiSaver regulations trustworthy?
• 21:51
  Yeah, I think so.
• 21:52
  I mean, we've seen some horror stories in Australia, right, where fund managers have done some buying expensive cars and things like that.
• 21:57
  I don't think that could happen here because we do have that level of supervision and they'll also have a custodian and so there is that extra level here.
• 22:05
  And they do work quite tightly with the regulator, I think.
• 22:08
  I mean, I should never say 100%, nothing bad will ever happen, but some of them might make bad investment choices, but I don't think they're going to take your money and run away with it.
• 22:17
  Yeah, a hundred percent.
• 22:18
  And it is.
• 22:19
  It's certainly not like the 80s where that was very loosely regulated.
• 22:25
  You know, the Financial Markets Authority keeps a really close eye on this stuff.
• 22:29
  I would say KiwiSaver is one of our most regulated and supervised places.
• 22:34
  If you're nervous about investing, KiwiSaver is probably, I mean, for most people, the best place to start.
• 22:41
  It's very regulated.
• 22:42
  I spoke to Dean Anderson for the book, actually, about what it was like to start one up and his stories of getting through the layers of applications and monitoring.
• 22:51
  There was a lot there, so I think we can feel quite safe.
• 22:53
  So that's Dean Anderson from kernel.
• 22:55
  Yeah, yeah.
• 22:56
  They've done absolutely amazing in terms of how they've gone.
• 22:59
  Do you know what else I love is when we've got KiwiSaver coming through now and as you say, 20 years of KiwiSaver, amazing.
• 23:08
  I think it's been incredible for teaching people about investing and learning by doing that.
• 23:12
  So many more New Zealanders now have had that exposure to the share market, have seen how it works and are more confident now if they do want to say, I've got my KiwiSaver minimums and now I'm going to
• 23:22
  go invest elsewhere into a different type of fund, but outside of Kiwisaver.
• 23:27
  I think it's been incredible for giving people those training wheels and making it more part of our culture to invest, because for a long time, New Zealanders really didn't, did we?
• 23:37
  No.
• 23:37
  I feel that a lot of people were put off by the 1980s experience, which, to be fair, I don't remember, but I think that did change people's attitudes for a long time.
• 23:45
  And I heard people say, don't invest in shares, invest in something that you can touch, like a house.
• 23:50
  And that was a really pervasive view for a long time.
• 23:53
  And I think maybe that's just started to change in the last, even the last five years, when we've seen house prices fall significantly.
• 24:00
  Maybe we're not going to see so much capital growth in property going into the future.
• 24:04
  And at the same time, the share market's been going really well and a lot of people have been quite confident about that.
• 24:08
  And so I think maybe, maybe we are changing our view in that way.
• 24:12
  It's quite funny because I just recently put out an episode on whether your own home counts as an ambassador.
• 24:18
  Oh, yes, people get quite excited about that question.
• 24:21
  I get really mad and I was.
• 24:23
  Because I've done this before and the first time I touched on this topic, I got yelled at by various corners of the Internet and was like, well, I'm right, though, sorry.
• 24:35
  But, you know, this time around I was more braced.
• 24:37
  I was like, oh, yeah, people get mad about this one.
• 24:39
  I stand by it.
• 24:40
  That's why I'm going to put this episode out.
• 24:43
  But, you know, brace for impact that your own home is different from an investment property and therefore you should treat it financially differently.
• 24:53
  And I'm not trying to be controversial, I'm trying to warn people.
• 24:55
  But anyway, I was braced for impact.
• 24:56
  I was like, here we go, here goes this episode.
• 24:58
  People are going to yell at me again.
• 25:00
  The cost of business worth it to reach people who might need to hear it.
• 25:05
  And yet this time around, the comment section was pretty much like, yeah, which I thought was fascinating.
• 25:13
  I think since that sort of 20, 21 peak of the market and people seeing house prices come down and then stay down and not immediately rebound, and at the same time, we've had more kiwisaver, more investing as part
• 25:25
  of our culture, that people are actually just from being exposed to these concepts, sort of seeing it in reality and being like, okay, yes, property can be good.
• 25:37
  Shares can also be good.
• 25:40
  Here's the ways they can work together.
• 25:41
  It's almost.
• 25:43
  It's created a bit of a culture change in that learning by doing phase that I think is actually very good for New Zealand financially.
• 25:50
  But, I mean, what do you think?
• 25:51
  Have you noticed a bit of an attitude change, too?
• 25:54
  Yeah, I think so.
• 25:55
  I mean, it's been helped by the fact that the US share market has been so strong that some, you know, I mean, if that turned around, we could see sentiment change too.
• 26:03
  We'll see what happens with AI.
• 26:05
  That's right.
• 26:06
  But I do think, yeah, people have a broader view these days.
• 26:08
  Having your own house paid off is a really helpful thing when you're going to retirement.
• 26:11
  But it's not the only thing.
• 26:13
  I mean, you can do all sorts of things in an investment.
• 26:16
  Property actually at the moment isn't returning a great yield, especially when you think about rising rates and insurance and all that sort of thing.
• 26:23
  I think the picture is different.
• 26:24
  Yeah, yeah, yeah.
• 26:26
  No, absolutely.
• 26:27
  I was very.
• 26:27
  So always happy not to get yelled at.
• 26:29
  So, you know, that was great.
• 26:31
  My Monday went better than I thought it would.
• 26:34
  All right, there's another one where someone asked me, does, doesn't Kiwisaver fund things like the war in Gaza?
• 26:41
  I'm not putting my money in there when it's building weapons.
• 26:45
  What do you make of that question?
• 26:46
  Yes, this has been talked about a bit too.
• 26:48
  And there are some providers who will have some exposure to defense stocks and things like that, because, you know, those are large companies and they are listed and you know, some money is going into defense stocks around the
• 26:59
  world.
• 27:00
  But you can, you don't have to.
• 27:01
  You can be with a provider who takes the stance that they're not going to invest in weapons or actually there's a whole range of things that, that you could say that you don't want exposure to.
• 27:09
  And I find that mindful money is quite a good tool to have a look and see what you're investing in and just make sure that you're happy with that.
• 27:16
  Yeah, they make it so easy.
• 27:17
  Because I think the problem as well with the ethical concerns, like this person mentions the war in Gaza.
• 27:21
  Very fair thing to be concerned about.
• 27:23
  Some people are concerned about animal testing, some people are concerned about gambling.
• 27:28
  I mean, these ethical concerns can be so individual.
• 27:32
  And what I love about the mindful money system is they let you rank and put in your concerns and then look at funds based on that, which must Take them a lot of research.
• 27:42
  Yeah, I think so.
• 27:43
  But it is good because what's important to one investor is not what's important to somebody else.
• 27:47
  And so you could see a fund as describing itself as responsible or sustainable or ethical or various things that they call themselves.
• 27:54
  And you just want to make sure that that aligns with what you believe is important too.
• 27:58
  Yeah, exactly.
• 27:59
  This is another one that I get a lot.
• 28:01
  I'm a parent.
• 28:02
  Should I be putting money for my kid into KiwiSaver or a different type of fund?
• 28:07
  There's not the $1,000 Kickstart anymore, which was the big incentive for lots of people to put their kids in.
• 28:12
  And so that's how briefly I had one child in and one not because she was born after the kickstart was removed.
• 28:18
  Bad timing, kid.
• 28:19
  That's right.
• 28:20
  Actually, though, I put her in just recently because there was $100 for signing up bonus.
• 28:25
  So I thought, okay, there you go, Olivia, you can go in now.
• 28:28
  But for kids, I think it's helpful to set them up with a Kiwi Saver and put some money in there.
• 28:32
  But I suppose the restrictions around it are something to think about because it's great to help kids save for a first home, that sort of thing.
• 28:40
  But maybe they want to save for university or travel or something like that and they won't be able to use their KiwiSaver for that.
• 28:46
  So I guess it's just a matter of thinking about what you want to save four and you want to help them and then how you do that.
• 28:53
  And maybe they turn out to be the entrepreneurial type.
• 28:55
  That's right, yeah.
• 28:56
  Want to start a business?
• 28:57
  You won't be able to access KiwiSaver for that.
• 28:58
  Not at the moment.
• 28:59
  Yeah, yeah.
• 29:01
  Although of course, if they do get a part time high school job, they've changed the world, haven't they?
• 29:05
  Is it 16 that it starts now?
• 29:06
  You can now get employer contributions, so that's potentially worth when they get into those, like later teenage years.
• 29:13
  Yeah, I would think definitely.
• 29:14
  Once they're working, it's a good idea to be in KiwiSaver because I do think the earlier you start the better because you don't have to get used to it so much.
• 29:20
  You know, if you start when you're in your first real job and earning your first proper salary, that's a harder cut to take going into KiwiSaver than if you kind of ease into it with a part time job.
• 29:31
  So true.
• 29:31
  I think so much of money is that mindset thing that we, we know what we need to do, we know what we should be doing.
• 29:38
  The Beautiful thing about KiwiSaver is it automates it, it makes it just part of your pay and you get used to it, you never see it, it's just straight through there and you're planning for your future.
• 29:47
  Great, love that.
• 29:49
  And I think sometimes, like, I'm very much like for myself, I make sure I've always had the minimum of whatever I'm entitled to of KiwiSaver at that time.
• 29:58
  Now that I'm self employed, very little pre that.
• 30:02
  Yeah, damn it.
• 30:05
  But you know, now that that's happening, I still have other investments on the side and I've always, over and above that, had investments on the side.
• 30:13
  Then again, I talk about money all day.
• 30:15
  It's pretty hard for me to forget that I should be investing when that's usually one of the conversations I have with someone on a daily basis, you know.
• 30:23
  And so it's constantly at the forefront of my mind.
• 30:25
  I'm constantly remembering about it.
• 30:26
  Whereas if someone is sort of like, oh yes, I should invest, but don't get round to it, there can be this real problem of perfect being enemy of the good, don't you think?
• 30:36
  Whereas Kiwisaver is nicely built to get around that and make sure you actually do it.
• 30:40
  Yeah, you just have to sign a form and then someone else takes care of it for you, really.
• 30:43
  Which is a great thing for busy people.
• 30:45
  Yeah, we appreciate that.
• 30:48
  So someone else came in and said, how often should I be changing funds and checking things like how well my provider is doing and my fund type, basically, how often should they give it a little woof?
• 31:01
  I reckon it's worth checking every year.
• 31:03
  I don't think you necessarily need to make changes every year, but it's a good idea to just check in, make sure you're still comfortable with how everything is going and that your settings are still right and you haven't
• 31:11
  had some major life change or something that alters your plans.
• 31:14
  Once a year is a good sort of schedule, I reckon.
• 31:17
  What sort of things would you check on that checkup?
• 31:19
  I check things like my current balance.
• 31:21
  I try not to look more often because I just get a bit in my head about it and it's not helpful.
• 31:25
  So once a year I look at my balance, make sure that the returns look reasonable compared to the rest of the market, that I still think that my risk level is appropriate and that is because I'm not retiring
• 31:35
  for quite a long time and then just, I just crack along See if I'm.
• 31:40
  All my contributions are going in as they should be and all looks good.
• 31:43
  Just have a play around with the calculators and see what I'm on track.
• 31:46
  For in terms of.
• 31:48
  So we've talked a bit about what you think is going to happen.
• 31:51
  Has there been any sort of behind the scenes chats that you've had, whether it's with people in the industry or with other politicians?
• 31:58
  Other potential changes to Kiwisaver that you think might be on the agenda but maybe not talked about quite yet?
• 32:06
  It feels that there needs to be something done for self employed people because that is a major problem.
• 32:10
  I think if anything it would be the total remuneration package issue is probably what might be addressed because a few politicians have told me they're not ruling it out.
• 32:20
  And it does seem that if we go just being compulsory then that's something that needs to be dealt with because anyone who's being paid total remuneration will miss out really, if we go compulsion and increase contributions.
• 32:30
  Yeah.
• 32:31
  Give us the world's fastest recap on total remuneration and how that can catch people out.
• 32:35
  Total remuneration is where you're paid one bit of money and that's meant to cover your salary and your kiwisaver.
• 32:41
  So say you get 100 grand a year, that's what your employer's giving you up to you.
• 32:45
  Whether you put any of that in kiwisaver, the employer is not putting any extra on top of it.
• 32:49
  And so if we increase contribution rates, it means you take more out of that hundred grand and put in your kiwisaver and the employer doesn't have to do anything different.
• 32:57
  So that's not ideal from an employee perspective.
• 33:00
  Absolutely.
• 33:01
  And to me it strikes me as just not in the spirit of Kiwisaver.
• 33:07
  Like yes, it's there, yes, it's legal.
• 33:10
  It's not really what was meant to happen.
• 33:12
  And that was.
• 33:13
  This is off the top of my head, was it 40% of contracts in New Zealand are total remuneration.
• 33:19
  Now is that something like half of all employers do it for some state and 25% do it for everybody or something like that, but it's really widespread.
• 33:29
  It is.
• 33:29
  And I do think it's not in spirit of the scheme.
• 33:32
  We're told it's like employee and employer contributions, but in that situation it's not really interesting.
• 33:37
  Okay, so if someone's listening to this and they're thinking, okay, my kiwisaver, I think I could probably do something better with it.
• 33:42
  Don't know where to start.
• 33:43
  If there's just one thing they did this week, what do you think it should be?
• 33:46
  Make sure you are in the right type of fund for your circumstances.
• 33:50
  And if there's one thing they stopped doing this week, what would that be?
• 33:53
  Freaking out about your balance moving around as long as you're in the right type of fund for your circumstances.
• 33:58
  Love that.
• 33:59
  All right.
• 34:00
  And you have a fantastic book.
• 34:01
  It is out right now so people can get it, give us the plug and tell us where they can find it.
• 34:06
  It's called you'd KiwiSaver questions answered and it's out pretty much most bookshops.
• 34:11
  I think that's fantastic.
• 34:13
  Thank you so much, Susan Edmonds.
• 34:14
  And of course, keep up with all of your wonderful work on RNZ as well.
• 34:18
  And whenever they say you're coming up next, I always turn up the radio and tell the kids to pipe down.
• 34:25
  Susan's doing her thing.
• 34:27
  Thank you so much for coming in.
• 34:29
  Now, if this episode was helpful to you, send it to a friend.
• 34:31
  We can all level up with our money together.
• 34:33
  Until next time, have a great day.
• 34:37
  This podcast can only give you general information about how things work in most situations.
• 34:42
  It's not individual financial advice.
• 34:45
  If you're after that, a financial advisor is always the best bet.