Growth KiwiSaver Funds
If you’re eyeing significant long-term gains and don’t mind riding out some market ups and downs, growth KiwiSaver funds might be just what you’re looking for. These funds are all about seeking higher returns by investing in higher-risk assets. They’re designed for those who are comfortable with a bit of risk and are aiming for substantial growth over the long term.
What are Growth 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.
Growth funds are typically made up of around 75% growth assets and 25% income assets. This setup focuses on maximising growth over time, so it’s ideal for those who can handle some ups and downs in the short term in exchange for potentially bigger gains in the long run.
Who Should Consider Investing in Growth Funds?
Long-Term Investors: If you’re approximately 10 years away from retirement or your first-home purchase and can afford to ride out market volatility, growth funds offer the potential for higher returns over the long term.
Those Comfortable with Risk: If you’re okay with the possibility of short-term losses in exchange for the chance of greater gains, growth funds could be a suitable choice.
Investors Seeking High Returns: If your primary goal is to maximise your investment returns and you’re prepared for the associated risks, growth funds align with that objective.
Things to Watch Out For
While growth funds offer the potential for higher returns, they also come with increased risk. The value of your investments can fluctuate significantly, and there’s a possibility of experiencing losses, especially in the short term. It’s important to ensure that you’re comfortable with the level of risk and have a long-term perspective before committing to a growth fund.
It's important to note that although funds are typically a great fit for younger investors, if you’re planning to buy your first home, it’s wise to wait to invest in these funds until after you’ve completed your home purchase.
Determine Your Risk Tolerance
If you want to know whether a growth 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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