Kiwisaver is not just yours! BEWARE!

[Bald Eagle]

Sure, there's a chance that something bad could happen to the provider I've chosen but there is a deal of protection there so I'm quite comfortable.

There's no protection there. As various Govt's have shown in the past, if they don't like the way it's going they change the rules. I wouldn't expect any return from Kiwisaver by the time the current young generation get to 'pension collection age" All you are doing is giving this and future Govt's an interest free loan for the rest of your working live.

[davereid]

To date I've put in $1370 of my own money and my balance is at just under $5000. You just can't convince me that KiwiSaver is a bad thing. Sure, there's a chance that something bad could happen to the provider I've chosen but there is a deal of protection there so I'm quite comfortable.

Kiwisaver is not a bad thing. It is just not as good a thing as it is promoted as being.

I don't think its the best use of your money, by a long, long shot. But as others have commented, they would otherwise be spending their money on wine, women and song. (Another great investment in my opinion.)

Your sums about your investment return to date, are entirely correct. It has, in percentage terms performed really well for you.

But lets imagine you had started in kiwisaver 20 years ago, and your balance is $250,000.

Your contribution = $915
Your employer = $915
Tax credits = $915
Fund Growth ? Who knows ? Historically it will be minimal, maybe 4%

Fund Growth = $10,000
Less Tax leaves $7900
Less Fees leaves $7400

New Balance = $ 260145

Reduce to allow for inflation @ 3.5% (IMHO a conservative figure given history)

New Real Balance = $251,039.

Thats not a spectacular return. But its still better than a kick in the head !

The issue is the great unknowns. The major one is inflation.

The key rule is that in times of high inflation, the person who controls assets will win.
The person who owns cash will lose.

An example..

In 1972 my mum built a brand new house. Nice location near the beach, 3/4 acre section, 4 bedrooms, brick and tile. It cost $5000. An absolute fortune, about 4 times her annual wage.

In two years time, the $4000 mortgage will be paid off.

For the first 5 years, the mortgage plus rates and insurance were much higher than renting, with mum spitting out a massive 50% of her take home pay on the $10 a week mortgage. The next 5, it was about the same as renters. For the last 30, mums house has been appreciating in value, while all her outgoings were reducing as a percentage of her wage. But she still paid $10 a week mortgage.

Mum has lived cheaply for 30 years. Paid no tax on her appreciating asset. And could now subdivide, or sell and move to a smaller home, banking hundreds of thousands of dollar in the process.

Compare to the man who put his $5000 in an investment. Even a really good one, paying say 10% and paying tax at the super low PIE rate.

He would have $104,000 in the bank today.

What if he had added the $500 a year mum was paying in mortgage repayments ?

Well first, he would have struggled.

As he had to live somewhere, he would be paying rent.

But assuming he could do that, then he would have a whopping $240,000.

So IMHO Kiwisaver may be a good idea if you don't have a clue about managing money. But if you do, then you may find that simply buying your own home, and clearing the debt quickly is a better bet.

The other thing to remember is that all the calculation we have done about kiwisaver assume that the governments tax credit will rise every year by the rate of inflation. So far it has not, and I am not aware of any commitment from Government to increase it.

So the kiwisaver returns calculated are higher than you will actually get.

[Oakie]

There's no protection there. As various Govt's have shown in the past, if they don't like the way it's going they change the rules. I wouldn't expect any return from Kiwisaver by the time the current young generation get to 'pension collection age" All you are doing is giving this and future Govt's an interest free loan for the rest of your working live.

I meant 'protection' provided by my provider as part of the scheme, not Government protection. Any KiwiSaver scheme is only as good as it's provider and mine has some protection for me if things go badly for them. (Research your provider people!)

[avgas]

Just one of the reasons I'll not trust a [insert emotive sounding name I should vote for] government again.

Fixed it for you

[HenryDorsetCase]

News that kiwisaver might become compulsory has made me think about things and do a bit of searching... Only searching I ever do involves bikes but this intrigued me.

Just found out if you're in the process of a divorce and your partner has never worked, i.e. they have no kiwisaver they may be subject to receiving half of your kiwisaver balance!!! That's just fucking bananas!

Not letting anyone see my kiwisaver balance, doesn't exist!

If you are going through a contested dissolution process, you will be unable to prevent the other side finding out those details. Kiwisaver would be one of the easy ones to find to be honest.

This principle is entirely consistent with the principles of the Property (Relationships) Act 1976. It applies to most any asset of a relationship. there are some specified exceptions.

Its just not that big a deal.

[Mudfart]

my mum lost here super years ago, and before they offered to return it several years ago, she was already cold. 25 yrs worth of super.
unfortunately, when the economy gets tight, the grubbermint has trouble keeping the MP's greedy corrupt fat fingers off a bank balance that, currently, reads over 4.5 billion dollars.
Now imagine kiwisaver ledger in 5 more years, well over 10 billion!.
Good luck getting your kiwisaver when you get to retire.
If they make it compulsory for everyone (strangely enough government employees are exempt from HAVING to join), then surely they must secure the fund.
If they dont, its a call to arms.

[davereid]

my mum lost here super years ago, and before they offered to return it several years ago, she was already cold. 25 yrs worth of super.
unfortunately, when the economy gets tight, the grubbermint has trouble keeping the MP's greedy corrupt fat fingers off a bank balance that, currently, reads over 4.5 billion dollars.
Now imagine kiwisaver ledger in 5 more years, well over 10 billion!.
Good luck getting your kiwisaver when you get to retire.
If they make it compulsory for everyone (strangely enough government employees are exempt from HAVING to join), then surely they must secure the fund.
If they dont, its a call to arms.

I think what will happen is..

1. Kiwi-saver will be made compulsory
2. The Government Tax credit can then be removed, or more likely just left un-increased, as it will soon be an insignificant amount.
3. The existing NZ Super will remain to cover the very few who don't have a Kiwisaver account, due to never working. But it will be asset and income tested.

So you will end up exactly where you are now. Its only that you will pay 4% more of your pay to get there.

[Oakie]

Now imagine kiwisaver ledger in 5 more years, well over 10 billion!.
Good luck getting your kiwisaver when you get to retire.

The thing is though it's not vested in the government. It's in the hands of investment companies to the Gov't can't do anything the KiwiSaver funds just as they can't do anything to funds invested in non-KiwiSaver investments.

[davereid]

The thing is though it's not vested in the government. It's in the hands of investment companies to the Gov't can't do anything the KiwiSaver funds just as they can't do anything to funds invested in non-KiwiSaver investments.

Various governments have simply Nationalised private assets in the past.

I don't think that would happen to your Kiwisaver portfolio.

But I could see the government changing the PIE rate to obtain more tax, introducing a financial transaction tax, or making you pay death or gift duty on your balance should you die before 65. These are all things that have been proposed already.

[2wheeldrifter]

No. You just need to ensure that your relationships never exceed three years. This includes defacto relationships.

Otherwise the gold-diggers are entitled to take half of your assets.

Think you will find thats it's 2 years.... so if your over the 2 year mark now dude your castrated

[reofix]

"You're thinking about it the wrong way. I'm getting a 100% return on my KiwiSaver contributions because I'm taking what my employer contributes as my return (2% each). Any actual growth on the total is just a cherry on the top. I'd defy you to find any normal investment to match that! "


WRONG....That 2 % has already been taken from your wage increases by your boss

[reofix]

I have a bit of savings lying around and wondered if you would be interested in a profit sharing arrangement . Bank term deposit rate guaranteed (current location of money ) and a 50/ 50 split on profits above that .. no fees . Just trying to find an advisor who believes in his own advice. Not expecting to be rushed off my feet

[MadDuck]

Just trying to find an advisor who believes in his own advice. Not expecting to be rushed off my feet

Dont hold your breath you might explode.

Theres been more $ and scenarios than I can be bothered responding to. You have to look at YOUR own cricumstances and decides what is best for YOU.

A single chick with a nominal mortgage and no siblings will look at this totally different to a bloke with a wife and dependants. I die tomorrow and what a bloody waste of money it was investing in KS. I could have gone and spent that enjoying life.

[Oakie]

WRONG....That 2 % has already been taken from your wage increases by your boss

Ha ha. NO! I guess there will be some employers out there that did that but not mine. As Human Resources/Payroll dude I saw the figures, was part of the process and know that my employer took the hit on the chin.

[HenryDorsetCase]

Ha ha. NO! I guess there will be some employers out there that did that but not mine. As Human Resources/Payroll dude I saw the figures, was part of the process and know that my employer took the hit on the chin.

so did we. When we said to the staff "We will chuck in the extra" it was tax deductible to us, but then it was changed so it wasnt. I love politicians.