Are the KiwiSaver performance results really that great compared to returns from other types of investments?

We can hear from all sorts of media outlets and financial advisors operas about greatness of KiwiSaver and how everyone should joint this retirement investment schema.

Most reviews are narrowed down to comparing the groups of KiwiSaver funds (conservative, balances, growth, etc.) or the individual funds within the same group.

But we can’t see or hear too much about comparing KiwiSaver to other types of investments.

Let’s bridge that gap and shed some more light into this grey area of media news. Firstly, let’s have a look at the KiwiSaver performance and then review returns from some other investments types during the last calendar year.

KiwiSaver returns by fund types in year 2011

KiwiSaver Fund Type

Gross return

(in %)

Fees

(in %)

Net return

(in %)

Peer

4.30

0.50

3.80

Conservative

4.30

0.69

3.61

Moderate

3.60

0.83

2.77

Balanced

3.40

0.93

2.47

Growth

-0.40

0.94

-1.34

Aggressive

-4.80

1.01

-5.81

And now have a look at some other types of investments, reviewing their performance and returns they offered in year 2011.

Other investments returns in year 2011

Investment

Investment group

Net return

(in %)

Gold

Commodity

10.06

Crude Oil

Commodity

13.33

ANZ Serious Saver

Savings Account

4.50

NZ residential houses

Property

4.40

If you look at the numbers above, it’s quite clear that even the most basic and most secure investment type such as simple savings account would result in higher returns (4.50%) than the best performing type of KiwiSaver fund (4.30%).

And you wouldn’t have to pay any management fees for handing in your money!

After including these fees, the net returns from the highest earning type of Kiwisaver fund would be only 3.80%, making the difference even bigger!

Conclusion

Shame on you, KiwiSaver!

Despite the mega propaganda from the government and the finance industry this whole underperforming schema is a huge looser. People should wake up and stop supporting this fraught.

Yes, you may get some extra tax credits making it worth your attention, but you need to realise that there is no such thing as a free lunch. Your tax credits given to you have been taken away from you in the first place!

It’s only moving your money from one pocket into another, creating an illusion about Kiwisaver worthiness when in fact the only ones who are profiting from it are the KiwiSaver funds managers and the government.

Remember, one day when you retire, they may say “Dear Jim, since you have saved enough money in your KiwiSaver (assuming they have not stolen it away from you by then), you won’t get any or only reduced pension from us”.

Don’t be a fool and stop supporting this whole rip-off KiwiSaver thing, opt out of it (if you can) and start looking into some other alternative investment options.

Posted on: September 13, 2013
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