KiwiSaver Tips for First Home Buyers: What Matters Long-Term
Congrats! You’ve taken one of the biggest financial steps of your life by purchasing your first home. It’s a huge milestone and one that often requires every bit of focus, energy, and savings you’ve got. Now that the keys are in your hand, it’s time to look forward. And one of the smartest things you can do next? Reassess your KiwiSaver.
Why Your KiwiSaver Still Matters (Even After You've Used It): A lot of first home buyers tap into their KiwiSaver to help with the deposit and rightly so! It’s a brilliant tool for getting into the market. But here’s what many people forget:
KiwiSaver isn’t just for buying your first home: It’s also one of the most powerful tools you have for setting yourself up financially for the long-term, specifically for building wealth for your retirement. So, now that you've withdrawn from it, you need to reset for your KiwiSaver strategy .
Think Long-Term - Time Is Your Biggest Advantage: Here’s the thing: if you’ve just bought your first home, chances are you’re still relatively young which means you’ve got decades ahead of you before you’ll access your KiwiSaver again. This time is your greatest asset when it comes to growing wealth.
Growth or Aggressive Funds Are Your Friend: If you’ve got a long-term investment period in front of you, a growth or aggressive fund can provide higher returns over a longer period. These fund types carry more short-term ups and downs, but over 20–30 years, they typically outperform conservative options giving you a much healthier KiwiSaver balance by the time you call on it again.
Even Small Contributions Add Up: We get it. After you’ve just bought your first home, cash can be tight. Mortgage repayments, insurance, rates, it all adds up fast. However, when it comes to KiwiSaver anything is better than nothing and long term consistency beats short term size, even a small contribution each month keeps your account growing. And make sure you’re not missing out on employer contributions and government top-ups.
As an example – $30 per week from age 30, starting from zero in an aggressive fund, will grow to an estimated $105,000 by the time you turned 65. It would take $110 per week, almost 4 times as much, if you waited until you were 50 to get the same result by age 65.
So, What Should You Do Next? Here’s your simple checklist to get back on track with KiwiSaver:
1. Check your fund type: It’s likely been changed to conservative to protect your home deposit, but now you’ve got decades ahead of you to invest, so it’s probably time to switch up and use that time to your advantage.
2. Check your fund provider: What are their returns? What are their fees? High past returns do not guarantee high future returns. Likewise high fees do not always equate to high returns.
3. Review your contributions: Are you getting the most out of your employer’s contributions? Can you increase your rate? Or set up a small regular transfer?
4. Government contributions: Make sure you’re still getting government and employer contributions by meeting the minimum requirement of putting in $20 per week. If you’re self-employed, a student, on maternity leave, unemployed, it is still possible to contribute to your KiwiSaver and get the Government contribution.
5. Talk to a trusted adviser: We’re here to help you review your setup and make a plan. It’s our goal to ensure you are on the right track for long-term financial freedom and a stress-free life when you hit retirement.
The bottom line?
Buying a home was step one. The next step sets you up for long-term wealth and financial freedom. By taking the above actions and using forward-thinking to set yourself up when it really counts, you give yourself a better chance of achieving the financial freedom you dream of in retirement. It is possible with the right strategy and that’s why it’s so important to review it now. Let’s get you on the right path and set you up with a strategy for success.
Information in this article is generic in nature and is not meant to be financial advice.
Investment return estimates from sorted.org.nz calculator.
