Disclaimer:
The information on this website is for general guidance only and does not constitute financial or investment advice. Always do your own research and seek personalised advice from a qualified financial adviser or mortgage adviser before making financial decisions. All investments carry risk and past performance is not indicative of future results.
Key Takeaways
- Match fund risk to your home-buying timeline.
- Growth funds suit long-term saving horizons.
- Conservative or defensive funds may reduce volatility close to buying.
- Switching funds can reduce volatility but may also change expected returns.
- Consider licensed financial advice before changing fund type.
Choosing the right KiwiSaver fund is an important decision - especially if you're planning to use your savings for a first home withdrawal.
The right fund should align with your time frame to buy a house - are you buying within the year, or are you still in saving mode? - and your risk tolerance - how much fluctuation could you handle? Keep reading to find out more.
Accelerating Towards Your Goal with Growth Funds
If home ownership is part of your longer-term plan and you are still building your deposit, a growth fund may be one option to compare. It can offer higher long-term return potential, but it also comes with more ups and downs.
Growth funds generally hold more growth assets such as shares and property. FMA says these can rise and fall quickly, although over time they typically provide a higher return. They may suit longer timeframes better than money needed soon.
Balancing Caution with Conservative KiwiSaver Funds
If you are getting close to making offers or expect to withdraw soon, it is worth comparing conservative or defensive KiwiSaver options and checking whether your current fund still matches your timeframe.
Conservative and defensive funds usually have fewer growth assets, so returns may be lower but more predictable. FMA says they can be suitable when you expect to access money for a first home in the next few years.
Learn More: How Market Volatility Can Hurt First Home Buyers Using KiwiSaver
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Tailoring Risk to Your Home-Buying Timeline
The key difference between growth and conservative or defensive funds is the amount of investment risk. If you have a longer timeframe, a growth fund may be one option to compare. If you are planning to buy soon, FMA and Sorted material supports reviewing whether a conservative or defensive fund better matches the need to access money soon.
As a general planning framework, longer timeframes may allow more tolerance for growth-asset ups and downs, while money needed in the next few years may suit a more conservative or defensive approach. Use Sorted fund comparison tools or personalised advice rather than relying on fixed timeline rules.
It's Common Practice to Turn to the Experts for Guidance!
Figuring out which KiwiSaver fund to use is personal to your timeframe, risk tolerance and first-home plan. A licensed financial adviser or KiwiSaver provider may help you compare options within their advice scope.
Picking a KiwiSaver fund type is part of first-home planning, but it should be based on your timeframe, risk tolerance, withdrawal needs and advice where appropriate. Before switching, check fees, risks, expected access timing and whether the fund still fits your wider financial plan.
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