Business

Conservatism, indifference affecting KiwiSaver investors - economist

15:58 pm on 26 February 2018

KiwiSaver investors are leaving themselves shortchanged because of fear, conservatism and indifference, an economist says.

The latest ASB KiwiSaver survey shows investors are extremely conservative, while recent sharemarket volatility has seen people opting for the safety of term deposits.

But investors are also doing themselves no favours by remaining ignorant of or indifferent to how their money is invested.

The survey showed 17 percent of respondents have never reviewed their KiwiSaver fund choice, and 19 percent d not know which fund their investment sits in.

ASB senior wealth economist Chris Tennent-Brown said investors are missing out.

"Investors who remain in conservative funds and term deposits for their retirement savings may be disappointed in the long run."

He said investors needed to match their investment fund to their timeframe for retirement. The longer a person is away from retirement the greater ability to cope with the risk of sharemarket investment, which is likely to provide higher returns.

The survey also showed many respondents did not fully understand how their KiwiSaver investments worked, and that would make investors uncertain, unsettled, and rattled at time of market volatility.

"February's volatility has highlighted the challenges for both investors and product providers," Mr Tennent-Brown said.

The recent market slide had to be seen in the context of the more than 20 percent gain in the market in the preceding year, which was more unusual than the market correction, he said.

Mr Tennent-Brown said investors should not be put off by such volatility, but KiwiSaver providers need to help and inform their clients about choosing which funds to invest in.