As a KiwiSaver investor, it’s natural to feel a twinge of anxiety when you see the value of your fund dip. The immediate thought that often follows is: “Should I wait for it to recover, or should I change my KiwiSaver provider?” Especially when you’ve seen your fund fall considerably and now you fear doing something that compounds it, making the right choice is crucial.
Here’s a look at why changing providers could be a smart move, irrespective of the current state of your fund.
Recognising the Power of Like-for-like Share Exposure
If the provider you’re considering switching to offers a fund with similar share exposure e.g. both growth funds, you’re essentially looking at the potential for similar growth trajectories. By transitioning to a fund with a like-for-like exposure to shares, you’re maintaining your investment strategy, which means you’re not suddenly becoming more conservative or aggressive.
It’s crucial to remember that all investments, including KiwiSaver funds, are subject to market fluctuations. These ups and downs are a natural part of the investment journey. Historically, markets have always shown a tendency to bounce back over time, even after significant downturns, and by maintaining a like-for-like exposure you won’t be disadvantaged.
Performance Isn’t Just About Market Movements
While market fluctuations play a pivotal role in a fund’s performance, there are other factors at play. Management competence, operational fees, and the specific sectors or regions a fund invests in can also influence outcomes. A provider with a stellar track record, competitive fees, and a history of adeptly navigating market volatility might be more equipped to maximize your returns.
Don’t Let Loyalty Hold You Hostage
Sentimental value has no place in investment decisions. Just because you’ve been with a provider for a long time doesn’t mean you should stick with them if their funds underperform consistently. The primary goal is to secure a comfortable future for yourself, so you must be pragmatic.
Seek Fresh Perspectives
New KiwiSaver providers might bring innovative strategies, broader market insights, and modern investment techniques, all of which can positively influence a fund’s performance. Sometimes, a fresh approach can make all the difference in navigating volatile markets.
Consult, Deliberate, Decide
Before making the switch, it’s always wise to consult with KiwiSaver experts like Tim, here at KiwiSaver Advice. He can offer a nuanced view of why your current fund is underperforming and whether a new provider is genuinely a better choice.
The anxiety of switching KiwiSaver providers, especially during downturns, is genuine. However, when there’s a compelling case that another provider might serve your interests better, it might be time to make the change. Investing is all about growth, strategy, and adaptation. Staying agile and making informed decisions is the key to ensuring a prosperous financial future.