Re: Kiwisaver; Is Your Money Growing?

Postby crazychris on Wed 10/Jun/09 7:17pm

currently, reaching retirement age is like chasing rainbows. It'll keep going up and up and I'll more than likely die of old age before I reach retirement age... Currently 65, moving (or discussions about it) to 67, and in the next 20 years, is bound to jump again and again as the funds dry up.
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Re: Kiwisaver; Is Your Money Growing?

Postby ThingOne on Wed 10/Jun/09 7:20pm

crazychris wrote:currently, reaching retirement age is like chasing rainbows. It'll keep going up and up and I'll more than likely die of old age before I reach retirement age... Currently 65, moving (or discussions about it) to 67, and in the next 20 years, is bound to jump again and again as the funds dry up.


This is the one thing that concerns me about kiwisaver, currently we get the dosh at 65, no guarantee and future govt over the next 30 years ups that to 70 or even 80 who knows.
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Re: Kiwisaver; Is Your Money Growing?

Postby iodi on Wed 10/Jun/09 7:24pm

Tugboat wrote:You don't make a loss until you realise that loss.

That's a line put forward by financial advisors to make their clients feel better about losing money. Even if you don't realise the loss, it is still a loss.
Tugboat wrote:Most of you will be benefiting from dollar cost averaging whilst markets are low which will help compound your gains as the economy recovers.

Dollar cost averaging is a myth. The assertion is that dollar cost averaging reduces investment risk. Some versions go further and state (or imply) that it also produces higher returns. Both of these assertions are false. The reality is that dollar cost averaging increases risk and reduces expected return. Investing on a regular basis is a good thing for a variety of reasons, but dollar cost averaging is not one of them.
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Re: Kiwisaver; Is Your Money Growing?

Postby iodi on Wed 10/Jun/09 7:30pm

ThingOne wrote:
crazychris wrote:currently, reaching retirement age is like chasing rainbows. It'll keep going up and up and I'll more than likely die of old age before I reach retirement age... Currently 65, moving (or discussions about it) to 67, and in the next 20 years, is bound to jump again and again as the funds dry up.


This is the one thing that concerns me about kiwisaver, currently we get the dosh at 65, no guarantee and future govt over the next 30 years ups that to 70 or even 80 who knows.

Despite comforting noises from the current government (and previous governments), it simply doesn't make sense to maintain the retirement age at 65. When state-provided superannuation was introduced, only a small proportion of people received it and then most only got it for a few years. Therefore, superannuation didn't cost much. Now, life expectancy has increased greatly - most people can expect to live beyond the age of 65 and most of those who make it to 65 will live for many years beyond that. To have life expectancy increasing faster than the superannuation entitlement age just doesn't add up.
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Re: Kiwisaver; Is Your Money Growing?

Postby bigJIMMY on Wed 10/Jun/09 8:01pm

iodi wrote:
Tugboat wrote:You don't make a loss until you realise that loss.

That's a line put forward by financial advisors to make their clients feel better about losing money. Even if you don't realise the loss, it is still a loss.
Tugboat wrote:Most of you will be benefiting from dollar cost averaging whilst markets are low which will help compound your gains as the economy recovers.

Dollar cost averaging is a myth. The assertion is that dollar cost averaging reduces investment risk. Some versions go further and state (or imply) that it also produces higher returns. Both of these assertions are false. The reality is that dollar cost averaging increases risk and reduces expected return. Investing on a regular basis is a good thing for a variety of reasons, but dollar cost averaging is not one of them.

:withstupid:
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Re: Kiwisaver; Is Your Money Growing?

Postby bigJIMMY on Wed 10/Jun/09 8:03pm

Tugboat wrote:How have any of you "lost" money on Kiwisaver yet? The only way this is possible is that you have reached 65 years of age and cashed up out of a fund that didn't suit your investment needs and time you had to retirement in the first place. You don't make a loss until you realise that loss.

Most of you will be benefiting from dollar cost averaging whilst markets are low which will help compound your gains as the economy recovers. Take the Fisher Funds Kiwisaver fund for example. For pretty much the last year it's been hovering around the 70 to 75 cents per unit mark. If you're around thirty years old with 35 years till retirement then what you're looking at is dirt cheap units. If it stayed there for the next 10 years and then started increasing in value I'd be more than happy. That's not the case though and these things being cyclical there'll always be upwards and downwards movement in fund values. Fisher has gone from 72c per unit 6 weeks ago to close to 89c this week. That in itself is nearly a 25% rise in the value of the units that were purchased cheaply.

Most of the users on this site I'd presume to still be 25 years or further from retirement... forget about your Kiwisaver accounts now. Put in the pittance from your pay and take your free money from the government and your employer. Then in 10 years time take a serious look at it. If you don't understand the technicals of what your investment is (and going by what''s been said about Kiwisaver on here that's most of you) get professional advice on what is the best strategy for saving for your own retirement. Don't rely on your bank, your mates or glossy advertising to make these sorts of decisions for you.



you must be working for one of these funds to have such a delusional view.
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Re: Kiwisaver; Is Your Money Growing?

Postby Tugboat on Wed 10/Jun/09 8:11pm

iodi wrote:
Tugboat wrote:You don't make a loss until you realise that loss.

That's a line put forward by financial advisors to make their clients feel better about losing money. Even if you don't realise the loss, it is still a loss.


It's hardly a line. Considering that everyone in Kiwisaver has made a conscious choice (and hopefully, if they have any sense, an informed choice) of fund that (supposedly) suits their investment horizon and propensity for risk. So they should have a degree in comfort in understanding that growth oriented investment returns are cyclical in nature and from time to time the underlying value of their investment may fall.

I'd challenge any of you who are criticising the fall in value of growth oriented investments (most of which are heavily prescriptive in the types of ratios of assets that can be held at any time) to have done better yourselves given the dramatic shift of the global economy over the last 18 months. And that means by following your own "growth" strategy rather than in hindsight saying "I'd have been better off sticking my money in the bank".


iodi wrote:
Tugboat wrote:Most of you will be benefiting from dollar cost averaging whilst markets are low which will help compound your gains as the economy recovers.

Dollar cost averaging is a myth. The assertion is that dollar cost averaging reduces investment risk. Some versions go further and state (or imply) that it also produces higher returns. Both of these assertions are false. The reality is that dollar cost averaging increases risk and reduces expected return. Investing on a regular basis is a good thing for a variety of reasons, but dollar cost averaging is not one of them.


How is dollar cost averaging a myth? I certainly made no assertions about it supposedly reducing risk and I doubt that you could find any legitimate financial literature that supports this assertion either. The implication that it produces higher returns is confused with the fact that by regularly purchasing units at lower prices you will therefore own more units as benefit as the price rises.

Retirement savings is not about take a speculative approach and trying to time the markets. It's about deciding on an appropriate long-term strategy and sticking to your strategy through the cycles, reducing your risk exposures gradually as you draw closer to retirement age and therefore have an increased need for stability in your investments.
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Re: Kiwisaver; Is Your Money Growing?

Postby Tugboat on Wed 10/Jun/09 8:20pm

bigJIMMY wrote:
Tugboat wrote:How have any of you "lost" money on Kiwisaver yet? The only way this is possible is that you have reached 65 years of age and cashed up out of a fund that didn't suit your investment needs and time you had to retirement in the first place. You don't make a loss until you realise that loss.

Most of you will be benefiting from dollar cost averaging whilst markets are low which will help compound your gains as the economy recovers. Take the Fisher Funds Kiwisaver fund for example. For pretty much the last year it's been hovering around the 70 to 75 cents per unit mark. If you're around thirty years old with 35 years till retirement then what you're looking at is dirt cheap units. If it stayed there for the next 10 years and then started increasing in value I'd be more than happy. That's not the case though and these things being cyclical there'll always be upwards and downwards movement in fund values. Fisher has gone from 72c per unit 6 weeks ago to close to 89c this week. That in itself is nearly a 25% rise in the value of the units that were purchased cheaply.

Most of the users on this site I'd presume to still be 25 years or further from retirement... forget about your Kiwisaver accounts now. Put in the pittance from your pay and take your free money from the government and your employer. Then in 10 years time take a serious look at it. If you don't understand the technicals of what your investment is (and going by what''s been said about Kiwisaver on here that's most of you) get professional advice on what is the best strategy for saving for your own retirement. Don't rely on your bank, your mates or glossy advertising to make these sorts of decisions for you.



you must be working for one of these funds to have such a delusional view.


Although the company I work for does operate a Kiwisaver scheme I am not involved with it. My role primarily involves wholesale investments not retail.

To suggest my view is "delusional" reinforces your own lack of financial literacy.

Quite ironically just a month or so before the first string of recent finance company failures, the Reserve Bank funded a study into the investment decision triggers of NZers. Over 90% of respondents were comfortable with investing in a company purely on the basis of its advertising and would not seek out additional information via an investment statement or prospectus, or seek professional advice. And yet we wonder why so many people lost their savings in finance companies.
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Re: Kiwisaver; Is Your Money Growing?

Postby iodi on Wed 10/Jun/09 8:21pm

Tugboat wrote:Considering that everyone in Kiwisaver has made a conscious choice (and hopefully, if they have any sense, an informed choice) of fund that (supposedly) suits their investment horizon and propensity for risk.

If only that was true. I would assert (without any evidence) that most people: a. did not make a conscious decision (how many people are in "default" funds that they didn't choose?), and b. even if they chose the fund, many do not understand the fundamentals of investing.
Tugboat wrote:How is dollar cost averaging a myth? I certainly made no assertions about it supposedly reducing risk and I doubt that you could find any legitimate financial literature that supports this assertion either. The implication that it produces higher returns is confused with the fact that by regularly purchasing units at lower prices you will therefore own more units as benefit as the price rises.

OK, you didn't make the assertion, but dollar cost averaging is typically presented as a mechanism for reducing risk and (sometimes) for increasing expected return. That's what the whole concept is about, at least from a marketing perspective.
Tugboat wrote:Retirement savings is not about take a speculative approach and trying to time the markets. It's about deciding on an appropriate long-term strategy and sticking to your strategy through the cycles, reducing your risk exposures gradually as you draw closer to retirement age and therefore have an increased need for stability in your investments.

Agreed. But that isn't what most people do.
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Re: Kiwisaver; Is Your Money Growing?

Postby Tugboat on Wed 10/Jun/09 8:24pm

iodi wrote:If only that was true. I would assert (without any evidence) that most people: a. did not make a conscious decision (how many people are in "default" funds that they didn't choose?), and b. even if they chose the fund, many do not understand the fundamentals of investing.

Tugboat wrote:Retirement savings is not about take a speculative approach and trying to time the markets. It's about deciding on an appropriate long-term strategy and sticking to your strategy through the cycles, reducing your risk exposures gradually as you draw closer to retirement age and therefore have an increased need for stability in your investments.

Agreed. But that isn't what most people do.



An herein lies the real problem... financial literacy or lack thereof. If any subject should be compulsory in school. This is it.
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Re: Kiwisaver; Is Your Money Growing?

Postby shmoodiver on Wed 10/Jun/09 8:30pm

Tugboat wrote:
An herein lies the real problem... financial literacy or lack thereof. If any subject should be compulsory in school. This is it.


never mind parenting or any stupid shit like that
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Re: Kiwisaver; Is Your Money Growing?

Postby iodi on Wed 10/Jun/09 8:35pm

I did a study some years ago of cash inflows/outflows for a major investment fund (a “Balanced” fund, worth about half a billion dollars at the time). There was a strong correlation between the annual return earned by the fund in the previous 12 months and the flows in/out of the fund (with a lag of three months, to allow for results to be reported and people to make decisions). That is, if the fund went up in the last year, money came in. If the fund went down in the last year, money went out. The higher the gain/loss, the higher the inflow/outflow.

This meant that people tended to invest after the fund had gone up in value, and withdrew their money after the fund had gone down in value. The net effect was that the average investor lost money over the medium term that I examined, even though the fund itself made a healthy return over the same time period. That was before fees – deduct the not insignificant fees and most investors lost money.

No wonder many people have a bad impression of managed funds. Some of that impression is justified, but much of it is due to their own stupid behaviour. At least Kiwisaver has the advantage that people can't hit the panic button and withdraw their money after it has gone down in value.
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Re: Kiwisaver; Is Your Money Growing?

Postby bigJIMMY on Wed 10/Jun/09 8:43pm

Tugboat wrote:
bigJIMMY wrote:
Tugboat wrote:How have any of you "lost" money on Kiwisaver yet? The only way this is possible is that you have reached 65 years of age and cashed up out of a fund that didn't suit your investment needs and time you had to retirement in the first place. You don't make a loss until you realise that loss.

Most of you will be benefiting from dollar cost averaging whilst markets are low which will help compound your gains as the economy recovers. Take the Fisher Funds Kiwisaver fund for example. For pretty much the last year it's been hovering around the 70 to 75 cents per unit mark. If you're around thirty years old with 35 years till retirement then what you're looking at is dirt cheap units. If it stayed there for the next 10 years and then started increasing in value I'd be more than happy. That's not the case though and these things being cyclical there'll always be upwards and downwards movement in fund values. Fisher has gone from 72c per unit 6 weeks ago to close to 89c this week. That in itself is nearly a 25% rise in the value of the units that were purchased cheaply.

Most of the users on this site I'd presume to still be 25 years or further from retirement... forget about your Kiwisaver accounts now. Put in the pittance from your pay and take your free money from the government and your employer. Then in 10 years time take a serious look at it. If you don't understand the technicals of what your investment is (and going by what''s been said about Kiwisaver on here that's most of you) get professional advice on what is the best strategy for saving for your own retirement. Don't rely on your bank, your mates or glossy advertising to make these sorts of decisions for you.



you must be working for one of these funds to have such a delusional view.


Although the company I work for does operate a Kiwisaver scheme I am not involved with it. My role primarily involves wholesale investments not retail.

To suggest my view is "delusional" reinforces your own lack of financial literacy.

Quite ironically just a month or so before the first string of recent finance company failures, the Reserve Bank funded a study into the investment decision triggers of NZers. Over 90% of respondents were comfortable with investing in a company purely on the basis of its advertising and would not seek out additional information via an investment statement or prospectus, or seek professional advice. And yet we wonder why so many people lost their savings in finance companies.




I will continue this banter, just because i think investment companies that try to cover up their own dodgy practices are plonkers.

in any profession to charge for loosing peoples money i think is big BS.

(on a side note, i have my Kiwisaver in a conservative fund, which has had huge growth of 0.005% SWEET! before that i had money in an Asian development fund that did really well. now i am busting my guts to put money back into shares as i believe over the next 5 years it will go gangbusters.)

the reason for this whole thread was to get people back and looking at their kiwisaver schemes to see what is actually going on with their money, hopefully it has and hopefully no one is in one of the funds that are down 40%.
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Re: Kiwisaver; Is Your Money Growing?

Postby iodi on Wed 10/Jun/09 9:24pm

bigJIMMY wrote:in any profession to charge for loosing peoples money i think is big BS.

I have a similar issue with taxi drivers. When a taxi driver provides the service of taking me from one location to another, I will have an expectation of how long the trip will take and what it will cost. But if there is more than average traffic congestion along the way, not only will the trip take longer than I was expecting, but the worse the congestion the more the taxi driver will charge me for the service! How outrageous is that?

Of course, I might reasonably have an expectation that the driver will use their skill and knowledge to avoid areas of heavy congestion. Even so, there is only so much that they can do. If I choose to cross the CBD at rush hour, then I have to accept the risks that go with the journey. If I'm not prepared to accept the risks, then perhaps I should choose a different mode of transport.
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Re: Kiwisaver; Is Your Money Growing?

Postby Friendly Llama on Thu 11/Jun/09 10:51am

sweet_P wrote:Employers can contribute more than 2% if they want - it's just a minimum.

Didn't some big employer hit the news when they immediately jumped in with 4% when Kiwisaver first started? Or maybe my dicky memory is making that up...


Mine did. Still paying 4% too, and it doesn't have to be to Kiwisaver it can be to any superannuation :)
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