In our series “Money with Mary,” personal finance legend Mary Holm shares practical tips on a variety of money matters.
Disclaimer: This information has been prepared for the FMA by financial columnist and author Mary Holm. The views and opinions provided in the guide are those of Mary Holm and do not necessarily reflect the views or official position of the FMA. Mary’s advice is of a general nature, and she does not accept responsibility for any loss that any reader may suffer from following it.
You can use your KiwiSaver money to purchase a home in two scenarios:
While you’re saving for a home purchase:
The average returns won’t be as high as in a growth or aggressive fund. But there’s less chance your balance will be hit hard by a long-term market downturn as you approach the time you want to buy.
When the exciting buying time comes:
You may also get a First Home Grant – up to $10,000 from the government.
The irony of investment scams is that they are usually targeted at those who are trying to be smart with their money. So how do you tell the difference between a genuine investment and a scam? Financial columnist and author Mary Holm shares three tips to keep safe from investment scams.
Investment scams have become trickier and harder to spot. But the basic “rules” still apply.
Ignore any stranger who approaches you with a “good investment” – by phone, email or whatever. I’ve asked readers of my Herald column, and nobody has ever reported getting a good result from that.
Even if it’s someone you know, it’s highly likely they’ve been conned and will later regret it all. Invest when it suits you, not when somebody makes you an offer.
There’s no such thing as a low-risk investment with high returns. If you’re offered anything more than a few per cent, the investment MUST come with some risk. If it didn’t, the whole world would already be in it!
Don’t let anyone pressure you to “invest now or miss out!” That's a classic scammer's trick. A good investment will be just as good after you've taken time to check it out.
Understand how an investment makes returns.
More complicated investments are often highly risky.
Bills getting on top of you? It’s tempting to take a break from contributing to KiwiSaver. But try not to.
This used to be called taking a “contributions holiday”, but the name was changed to a “savings suspension” for good reason. A holiday sounds great, but there’s nothing positive about stopping KiwiSaver contributions. You’ll end up taking fewer real holidays in retirement.
Sometimes you have to stop contributions for a while. Perhaps your mortgage rate has jumped, or you lose your job.
Let’s say you’re an employee and you have to stop your 3% contributions. Set up an automatic payment directly to your provider of, say, $20 a week. That’s way better than nothing, and you 'll still get the government contribution. But return to 3% just as soon as you can.
The KiwiSaver Calculator on sorted.org.nz tells us how much a savings suspension will hit your retirement fund at 65:
That’s a real pity. Keep those cuts to a minimum.
These amounts don’t include the impact of inflation – this doesn’t reduce the amount, but it does affect what you can buy with the money you’ve saved.