After years of watching your KiwiSaver investment build up, it’s understandable that it may be uncomfortable to see a downturn in your balance, as a result of the current global uncertainty.
But being emotionally prepared for these downturns and sticking to your investing plan, can help temper any concerns, and weather the economic storm.
“This year has been an uncomfortable reminder that markets do not always go up in value. It's important to remember that downturns are a completely natural part of investing and investors need to be comfortable with this dynamic,” says Generate Adviser, Nick Zwi.
While it can be tempting to change funds or reduce your contributions during times of volatility, these changes can have devastating, long-term financial effects.
“When you make changes like these in times of market volatility, what you’re actually doing Is realising your losses and taking the value of your investment when it’s low - solidifying that loss. You are not giving yourself a chance to recoup your losses when the market recovers.”
Zwi says if you can, stick to your plan and avoid checking your balance too often. And if you have time before retirement or buying that first home, then remember KiwiSaver is a long-term investment, and let the experts take care of this for you.
“Talk to an adviser, and ask yourself has the reason you invested in the first place changed? Has there been a significant change in your circumstances? Or has your investment timeframe or your goal changed? If you have answered no to these three questions, then taking a long-term view and sticking to your plan will generally yield better results over the long term.
It never hurts to get expert advice before pulling the trigger on such an important financial decision,”. says Zwi.
To talk with a Generate adviser about your KiwiSaver account, contact us on 0800 855 322, or send us an email.