OPINION: If you checked your KiwiSaver balance recently and your stomach dropped – you’re not alone. But although in such times it's tempting to withdraw your cash or jump to a different fund, it generally pays to sit tight. Frances Cook explains.
Over the past few months, and especially last month, I had a steady stream of DMs from people wondering why their balance was falling, whether they were in the wrong fund, or if this whole retirement savings thing was just a scam.
Fair. It’s not easy watching thousands of dollars vanish from your account with zero explanation, especially when we’re already in fairly uncertain times.
So if I can give you one hot tip? Don’t panic. Don’t move your fund in a rush. And probably don’t cash out (unless you’re buying a house next week or about to hit retirement).
What’s happening right now isn’t a sign your KiwiSaver is broken. It’s a sign that it’s working exactly as it should.
Financial journalist Frances Cook explains how to ride the KiwiSaver wave through uncertain times. (Source: Breakfast)
What’s actually going on?
A short-term dip is normal, even if it’s annoying.
Markets have been all over the place. That’s not a technical term, but it’s the most accurate one.
There’s uncertainty everywhere, a lot of it sparked by the Trump administration, its ratcheting up of tariffs, and uncertain political allegiances.
The sharemarket is just a bunch of businesses, that let you own a piece of them, and then share in profits when times are good. That’s what your KiwiSaver invests into, to a greater or lesser extent, depending on if you’re in a conservative or growth account.
Businesses hate uncertainty. They’ve been known to respond positively to bad news, because at least that means they can plan. But uncertainty? That’s their kryptonite, because it’s impossible to know what to do next.
Big global events also spook investors, and when investors get nervous they often stop buying as many shares until they figure out what’s happening.
Just like a Trade Me price war, more people wanting to buy something means the price goes up. Meanwhile, fewer investors? Prices go down.
If you’re in a KiwiSaver fund that includes shares, that means your balance goes down too.
None of this is fun to watch. But dips like this are built into how investing works. And if you’re not planning to touch your money for a while, that dip doesn’t actually matter. In fact, it can be a good thing.
How a dip in the sharemarket can benefit you
If your KiwiSaver keeps investing while the market is down, you’re buying into investments at a discount. That means when your salary goes into your bank account, and your KiwiSaver deductions are made, your fund automatically employs a strategy known as “dollar-cost averaging”, a gold standard investing methods.
Some quick maths (and I’ll keep it simple, promise). Say you’ve got just $10. The market is up, so you buy shares for $2 each. You get five of them.
But then the market goes down, and those same shares drop to $1 each. You get paid, put in another $10 to KiwiSaver, and now you’re buying 10 of them.
You might think, on average, you’ve paid $1.50 per share. But actually, you now own 15 shares for a total investment of $20. So the real average price per share is $1.33.
You’ve bought more shares for less, just by keeping going.
Why does this matter? Economies have always recovered in the past, good times following the bad and sharemarkets go up in response. When that happens, those shares increase in value – and now, due that dip in price, you own more of them. That means a bigger gain when prices rise again, and a bigger slice of any future dividends.
Market dips aren’t just survivable, they’re opportunities.
The real danger is switching funds at the wrong time
Every time the market wobbles, fund providers report the same pattern: people jump from growth to conservative funds after the market has dropped, locking in losses, and missing the recovery.
We saw it in the 2020 Covid crash. We saw it during the 2008 GFC. We’re seeing it again now.
A recent survey from Massey University found that a third of KiwiSaver members admitted to switching funds at least once – and of those who switched in a downturn, many did worse than if they’d just stayed put.
So how do you know if your KiwiSaver is still right for you?
This is where I’m going to plug the Sorted Fund Finder tool – because it’s genuinely one of the best resources out there, and nobody’s trying to sell you anything.
You enter your details, answer a quick quiz about your risk tolerance and goals, and it’ll show you which type of fund (conservative, balanced, growth, etc.) might suit you best.
Then it compares different providers on fees, returns, customer service – the stuff that actually matters.
What the market is doing right now? Not so important, unless you’re planning to use your KiwiSaver in the next couple of years, to retire or buy a house.
If that’s the case, you should already be in a conservative fund.
But if you’re in your 20s, 30s, or even 40s, your money isn’t supposed to be pulled out for decades. You’ve got time to ride out the rough patches – and the historical data shows markets do bounce back.
So what should you do right now?
Glad you asked.
- Check you're in the right fund. Use the Sorted tool or talk to your KiwiSaver provider. If you’re only a few years out from retirement, maybe a growth fund isn’t right anymore. But if you’re 25 and in a conservative fund, you’re probably missing out.
- Don’t make decisions based on short-term dips. The market is unpredictable in the short term, but over the long term, growth is the norm. Moving now could lock in losses. When the value of a house goes down, do people panic and sell? Nope, they try to hold on for the recovery. Your KiwiSaver is similar.
- Resist the headlines. Yes, global politics are messy. Yes, economic data is full of mixed signals. But your KiwiSaver isn’t about this week. It’s about the next 20–40 years.
- Focus on what you can control. Like boosting contributions when you get a pay rise, or hitting that sweet $1042 annual contribution to get the full government match.
- Talk to someone if you’re unsure. This stuff can be confusing – and the stakes feel high. But you don’t have to figure it all out alone. Your KiwiSaver provider charges you fees, and part of the deal is that they can give you financial advice at times like this. That means it’s not just free to you, you’ve pre-paid. So call or email them, and make use of it.
The opinions expressed in this article are general in nature and should not be read as personal financial advice.
Learn more on this issue with Frances Cook's Making Cents podcast.
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