In New Zealand we have a long-term savings scheme called Kiwisaver.

Essentially, a percentage of your income that you designate (3, 4 or 8%) is funnelled to this saving fund, along side your PAYE income tax. The tax department then sends the money onto the fund manager.

The managers of the saving fund is your choice.

Employers have to match up the 3% of your income, and the government matches ~$1000 per year.

This fund cannot be withdrawn until retirement, though it can be used for buying a first home.

The question is - how do I assess the performance of various Kiwisaver funds - bearing in mind it's a long term saving, that I can't withdraw? (I can always switch provider though).

  • Sounds like a pretty good ROI from square one with employer and gov't matching. I wish Canada had this scheme. – Myles Oct 7 '14 at 19:46
  • @Myles It's an excellent scheme. New Zealanders on the whole aren't very good savers, and it's a pragmatic accpetance that the NZ Superfund isn't going to sustain pensions in the future. – dwjohnston Oct 7 '14 at 21:40

Mary Holm, who has a column on money in the NZ Herald, had this to say on the matter:

Research shows that over and over again, the top dogs in one decade can be bottom dogs the next decade, and vice versa. Past performance really is no guide to the future.

... Fees are much less likely than returns to change over time. And low fees make a big difference to the long-term growth of your account. So just how low are your fund's fees?

Perhaps that means the most sensible bet would be to pick a fund with good (but not necessarily best) historical returns but also with low fees. Personally, I've also included ethics as a factor in the decision, and I chose the ethical investment option offered by Superlife, hoping that it makes a small difference as explained here.

(I have no affiliation with Superlife)

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