With compounded interest, the difference between a conservative KiwiSaver fund and a growth KiwiSaver fund could be meaningful in the long term, an investment advisor says. Photo: 123RF
Another report has found people are not investing enough in their KiwiSaver fund to provide for a comfortable retirement.
KiwiSaver advisory firm National Capital launched its first KiwiSaver Value for Money Report, which indicated people needed to save more and put more of their money into growth assets.
National Capital managing director Clive Fernandes said the average contribution rate of 4.3 percent of a salary, compared with an optimum rate of 6.3 percent.
The company said about 69 percent of KiwiSaver funds should be invested in growth assets, compared with the current average of 56 percent across all savers.
"The difference in an expected return for a conservative fund and a growth fund is a few percentage points," Fernandes said.
"Now while this might not seem a lot, compounded over the lifetime of your typical KiwiSaver, who is about 40 years old, that's another 25 years of investing to go, and can result in tens of thousands of dollars."
He said the amount needed to set aside in KiwiSaver varied according to age group, but contributions were falling short in many cases.
Fernandes said it was difficult for people to set aside more money in longterm savings, particularly during periods of economic uncertainty, but necessary.
"Unfortunately, if we don't save now, our future selves will find it even more difficult. So just a small increment in saving now is going to make a big difference in the future."
Fernandes said savers should also look closely at what different funds offered, beyond performance and fees, such as the capability of the KiwiSaver provider and the focus of their investments.