Westpac is sounding the alarm for KiwiSaver members who switched to conservative funds during the Covid-19 pandemic but haven’t switched back. Nigel Jackson from Westpac warns that staying in these safer options could mean missing out on significant savings in the long run.
When the market took a hit in March 2020, many people understandably moved their money into conservative funds to protect it. But now, data shows that 27% of those investors have never returned to growth funds. This could end up costing them hundreds of thousands of dollars.
For example, if you had $25,000 in your KiwiSaver and switched to a conservative fund, you might end up with only $387,938 by 2054. If you had kept that money in a growth fund, you could have seen it grow to $615,423—over $225,000 more!
Westpac emphasizes that being in the right fund is crucial, especially for long-term goals like retirement. Growth funds typically offer better returns, even though they can be more volatile. Jackson points out that many Kiwis may not fully understand the importance of choosing the right fund for their future.
To help with this, Westpac has introduced a new high-growth fund aimed at encouraging more people to consider the potential for higher returns. Understanding how markets fluctuate is key to avoiding losses during downturns.
In short, if you’re a KiwiSaver member, it’s a good idea to review your investment choices regularly. Making sure you’re in the right fund based on your goals and where you are in life can lead to much better financial outcomes down the road. Don’t miss out on opportunities to grow your savings!
This article is originally posted on LinkedIn by Wenalyn B.
Article Reference: https://www.nzherald.co.nz/business/westpac-warns-kiwisaver-members-of-losses-from-sticking-with-conservative-funds-post-covid/ZQLNCGFBMVHYPED7Z4GAIVQFTU/
