|
By Paul de Klerk Investment Specialist
 March 2020 saw a tidal wave of switches from growth funds to conservative funds when share markets around the world tumbled from the uncertainty. I'm happy to say that none of my growth fund clients switched. In fact, a large number increased their savings rate in recognition that their Kiwisaver is a long-term investment and the market was experiencing a firesale. This strategy worked out well. Because since then we have witnessed one of the best growth periods in history. For the past 12 months to October 2024, the S&P500 has grown over 34% while the Nasdaq-100 has grown over 55%. I also predicted in October 2023 that inflation would not only decrease, but it would plummet to within the Reserve Banks target range by October 2024. This has now been achieved and many see this as a catalyst for interest rates to continue to decrease. Decreasing interest rates typically mean good news for well allocated growth funds as markets rise on the back of cheaper money. The fact that so many Kiwisaver members have not switched back to Growth funds highlights the lack of education in New Zealand when it comes to retirement planning. This is why getting proper guidance from a Kiwisaver specialists is so important. The secret does not solely lie in being properly allocated to the right fund, but also making the right decisions over time as markets move and emotions run high. Being in the wrong fund will cost alot of money in the long term. But as the saying goes: "Ignorance is bliss". In other words, most people who are losing this money don't even realise that it's happening. The economic cost to their retirement future can be severe. As you go through life, your investment goals are likely to adjust. I suggest that you regularly think about your goals and consider your risk capacity versus your risk tolerance. If you're unsure how to do this, feel free to reach out to me and I will help you for free. Click here to contact Paul for free Kiwisaver guidance.  Paul de Klerk
www.pauldeklerk.co.nz Paul de Klerk (FSP110367) is an investment specialist working for the Financial Advice Provider known as De Klerk Business Services Ltd (FSP1005978). The information in this article should be considered as opinion of the author and not personal financial advice. For personal advice, reach out to Paul at www.pauldeklerk.co.nz. For a disclosure statement visit www.pauldeklerk.co.nz/disclosure Comments are closed.
|