KiwiSaver Balances Are Dipping – But Here’s Why You Shouldn’t Panic

KiwiSaver is a long-term investment

KiwiSaver is designed to build wealth over decades, not days. Short-term movements, whether up or down are a normal part of investing. According to New Zealand-based commentary from Rupert Carlyon (Kōura Wealth), recent market movements have seen balances dip by approximately 3–4%*, reflecting typical market volatility rather than a significant downturn. These kinds of shifts are not unusual and are part of broader global market cycles.

Why are KiwiSaver balances dropping?

KiwiSaver funds are invested across a mix of assets such as shares, bonds, and cash. When global markets experience uncertainty – due to factors like inflation, interest rates, or geopolitical events, the value of these investments can temporarily fall.

The Financial Markets Authority (FMA) consistently highlights that market ups and downs are expected, particularly in growth-focused funds.

Should you switch to a Conservative Fund?

When balances drop, it can be tempting to move to a more conservative fund. However, switching funds during a downturn can:

• Lock in losses
• Reduce exposure to potential recovery
• Impact long-term returns

The FMA and Sorted both caution against making reactive decisions based on short-term market movements. Whether a fund change is appropriate depends on your:

• Time horizon
• Risk tolerance
• Financial goals

The flip side: market drops can create opportunity

While a drop in your balance may feel negative, there’s another side to consider. When markets fall:

• Your regular contributions buy investments at lower prices
• You accumulate more units for the same amount invested
• This can lead to stronger gains when markets recover

This is a core principle of long-term investing and is often referred to as “buying low.”

Can you increase your contributions?

If your financial situation allows, increasing contributions during a downturn can be beneficial. Because you’re investing at lower prices, those additional contributions may deliver stronger value over time when markets recover. However, this should always be balanced with your overall financial position and cash flow.

What history shows us

Market downturns are not new and neither are recoveries. Following the COVID-19 pandemic market crash, global markets experienced a sharp decline, followed by a relatively rapid recovery within months. While past performance does not guarantee future results, long-term data consistently shows that markets have trended upward over time.

The key principles remain – stay consistent, focus on long-term goals and avoid reacting to short-term noise

KiwiSaver is not about timing the market – it’s about time in the market.

Seeing your KiwiSaver balance dip can feel uncomfortable, but it doesn’t mean your strategy is failing. In many cases, it’s simply part of the process. What matters most is making informed decisions based on your individual situation not reacting to headlines or short-term changes.

Source: *Smart Money – NewsTalk ZB – Rupert Carlyon (Managing Director – Koura Wealth ), Financial Markets Authority and Sorted.org.nz.

Listen to the NewsTalk ZB Podcast on the subject Rupert Carlyon: Global tension? Ignore your KiwiSaver – Smart Money | iHeart