Why your KiwiSaver Fund Choice is so Important for First-Home Buyers
This article is sponsored by award-winning KiwiSaver provider, Generate
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 long-term plan (7-10 years away) and you're focused on saving, a growth fund might be a suitable choice to maximize your investment.
Growth funds are designed to increase your KiwiSaver balance by investing in assets with higher return potential over the long term. While they offer significant growth opportunities if you have time before purchasing your home, they also come with greater risk due to their sensitivity to short-term market fluctuations.
Balancing caution with conservative KiwiSaver funds:
Meanwhile, if you’re getting ready to make an offer and are spending your weekend’s attending open homes a conservative or defensive KiwiSaver fund is likely a much smarter option.
These funds are generally better at protecting your balance from market fluctuations, offering a steady base for your savings. This stability becomes crucial, when you're gearing up to withdraw your KiwiSaver savings for your first home.
Tailoring risk to your home-buying timeline
The key difference between growth and conservative/defensive funds lies in risk! If you have plenty of time before buying your first home, a growth fund could be a good option to maximize your returns and build up your balance. On the other hand, if you’re planning to buy soon, a conservative/defensive fund might be safer, protecting your KiwiSaver savings from market fluctuations.
It's a common practice to turn to the experts for guidance!
Figuring out which KiwiSaver fund to go with can be unique to you. Chatting with a KiwiSaver adviser might help you match your fund with your own financial situation and home-buying dreams.
Picking a KiwiSaver fund type is a big part of planning your finances. It’s all about what feels right for you, considering how much risk you’re okay with, when you want to buy, and what you’re aiming for. Whether you’re up for the bigger ups and downs with a growth fund or prefer the smoother ride of a conservative fund, this choice lays the foundation for the financial road that leads to your new front door.
For more information about Generate KiwiSaver Scheme visit www.generatewealth.co.nz
DISCLAIMER: No part of this article is intended as financial advice; it is intended as general information only. To see our Financial Advice Disclosure Statement, please see Generate FAP Disclosure Statement. For more information about the Generate Scheme's see the Generate KiwiSaver Scheme Product Disclosure Statement and the Generate Unit Trust Scheme (Managed Funds) Product Disclosure Statement or the fund updates. The issuer of both schemes is Generate Investment Management Limited. Past performance is not indicative of future performance.
