More about our scheme and your options
We believe the best way to grow the real value of your investment is to invest in growth assets
Growing the real value of your investment is vitally important in any long term savings plan. Simply putting your money in the bank on term deposit is safe but will see the purchasing power of your investment reduce every year as up to 38% of the interest earned can be lost in tax.
Even a 2% improvement in average return per year makes a significant difference in the value of your savings at retirement. The graph below clearly illustrates how much of a difference a 2% improvement makes.
History has shown that companies who consistently grow their profits will increase the value of their business and hence their share price over time. This is at the core of how Fisher Funds achieves attractive long term returns.
Even a 2% improvement in average return per year makes a significant difference in the value of your savings at retirement. The graph below clearly illustrates how much of a difference a 2% improvement makes.
Historically shares have provided the best long term growth.
Fortunately, under NZ tax regulations, capital gains from the sale of shares in New Zealand companies and Australian resident companies included in the Australian All Ordinaries Index are not taxed, which helps to increase your return relative to income-focused investments.
The graph below illustrates the difference in the retirement value of a KiwiSaver investment based on returns that are 4.5% p.a. and 6.5% p.a. respectively. Historically the return on growth assets, such as shares, has been more than the return on more conservative investments such as bonds.
The impact of higher returns on KiwiSaver value
at retirement after 42 years invested
Results are simulated in this chart. This analysis assumes an investor starts saving at age 23 with an annual salary of $35,000. Their salary rises steadily at 3.5% p.a. until age 65 when they retire. Of this salary they contribute an after tax 4% to their KiwSaver Scheme and their employer contributes 2%. Two investment return assumptions are presented. One is an assumed return of 4.5% after tax and fees each year. The other is an assumed return of an additional 2% making a total return of 6.5% after tax and fees each year. All portfolio amounts are shown in today’s dollar terms.
By presenting portfolio amounts in today’s dollar terms, we have stripped out the impact of inflation from the results, so as to compare purchasing power at retirement with today’s oprices for goods and services. Inflation is assumed to average 2%.
The assumed returns are illustrative only and do not reflect the actual or prospective performance of the Scheme or of any investment fund. The returns to members of the Scheme are subject to investment and other risks (including loss of income and principal invested) and no amount of returns is promised or guaranteed. Returns will vary depending on the investment performance of your chosen investment fund or funds.
