Conservative KiwiSaver Funds
If you're looking to grow your KiwiSaver savings without the rollercoaster ride of high-risk investments, conservative KiwiSaver funds might be your best bet. Conservative funds focus on stability and steady returns, which can be particularly appealing if you prefer a lower-risk approach to saving for your retirement.
What are Conservative KiwiSaver Funds?
KiwiSaver funds consist of a combination of Growth Assets and Income Assets. The split between growth and income assets is adjusted depending on your chosen risk profile.
Income Assets: These low risk assets usually include cash and bonds. They are designed to provide regular income to your fund through interest payments, offering stability and consistent returns.
Growth Assets: These higher risk assets encompass shares and property. They aim to deliver capital growth over time, with returns that can fluctuate due to market conditions.
Conservative funds are typically made up of around 75% income assets and 25% growth assets. They focus on steady growth by primarily investing in lower-risk options to keep volatility low. A smaller portion is allocated to higher-risk investments to promote some growth, aiming to balance stability with modest returns.
Who Should Consider Investing in Conservative Funds?
Those Nearing Retirement: If you're approaching retirement and want to avoid significant drops in your savings, conservative funds offer a safer, more stable option.
First-Time Home Buyers: If you're saving for your first home and planning to purchase within a few years, a conservative fund can help protect your investment over this time.
Risk-Averse Individuals: If market fluctuations make you uneasy, conservative funds provide a more predictable and less volatile investment experience.
Things to Watch Out For
While conservative funds offer stability and lower risk, they typically don’t provide the significant growth that higher-risk funds deliver over the long term. If you have more than three years before you plan to start withdrawing from your KiwiSaver fund, a higher-risk investment strategy is likely a better fit for you. It’s important to choose a fund that matches both your risk tolerance and your investment timeframe to ensure you’re on track to meet your financial goals.
Determine Your Risk Tolerance
If you want to know whether a conservative fund would suit your investment profile and timeframe, our KiwiSaver experts can run through a quick questionnaire with you, and get you into the right fund – free of charge. Get started.
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