What does Trump’s US election win mean for my KiwiSaver?

10 November 2016 / Published in Your Money

The unexpected result of the US election may impact your KiwiSaver investment. That’s because your savings may be invested in growth assets (shares and property), both in New Zealand and overseas. Initially global markets reacted negatively to this surprise but have since bounced back, however there may continue to be some volatility over the short term. These ups and downs in the value of the investments will flow through to your KiwiSaver balance, but don’t panic. Fluctuations in your account balance are to be expected.

What is market volatility?

World markets have times where they move up and down more than usual. This can be caused by significant financial, environmental, social or geopolitical events (for example a recession, natural disaster, an act of war or the unexpected US election result). These market movements can affect your KiwiSaver savings.

3 things to remember about your Kiwisaver savings

1. KiwiSaver is a long-term investment

KiwiSaver is designed to help you save for your retirement. It is a long-term investment, and is very different to a savings account or term deposit.

When you first enrolled in a KiwiSaver scheme, you might have chosen a particular investment fund. Each fund has a particular investment risk profile. Some funds are more aggressive in their approach to growth, while others aim to avoid too much risk.

You need to decide how you feel about the balance between investment risk (how much an investment may move up and down in value) and the potential returns you might expect. If your investment going up and down in value is likely to keep you awake at night, you should consider investing in a lower risk fund.

2. The market will pick up again

Markets are cyclical and we expect them to move up and down over time. Prior to the recent market volatility, world markets have experienced growth in recent years. It is impossible to predict when these cycles will start and finish. Investors who try to avoid volatile periods in share markets risk missing out on gains that can follow.

The nature of investments mean they go up and down over the long-term. But we understand it’s also human nature to worry about a shrinking balance. You’re better off not being too focused on the day-to-day changes in your KiwiSaver account balance, and instead looking at the longer-term trend.

3. You’re now buying lower

Every contribution you make to your KiwiSaver account buys new units in your KiwiSaver account. When the market is low, you’re actually buying those units at a lower price.

The units you’re buying now will help your KiwiSaver account grow over time as markets improve.

If you’re unsure about your fund selection, you can complete the online Help me choose tool to find out which fund we recommend for your investment timeframe.


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