kiwisaver worth a punt?

[Baa_Baa]

There has been a quite dramatic reduction in returns over the past 3-6 months on the various higher risk Kiwisaver portfolio fund allocations (Westpac managed), albeit returns are still positive they are now barely above CPI even on the growth fund. While returns have been good during the sustained bull markets, the risk appears that they revert to negative returns. I have moved my and my children Kiwisaver allocations to 100% cash for the meantime until the market exposed funds returns stabilise.

[smpl]

Sounds wise. Personally, being a 30 year old, I have shifted from Growth to Balanced. Since my KS has a 50% FX hedge (for the growth portion), so there is still considerable upside if the NZD were to crush. So assuming equities stay I high will wait for this before moving to Conservative or Cash.

My concern is that both bonds and equities will be crushed at the same time. Has this ever happened before?

[twotic]

There has been a quite dramatic reduction in returns over the past 3-6 months on the various higher risk Kiwisaver portfolio fund allocations (Westpac managed), albeit returns are still positive they are now barely above CPI even on the growth fund. While returns have been good during the sustained bull markets, the risk appears that they revert to negative returns. I have moved my and my children Kiwisaver allocations to 100% cash for the meantime until the market exposed funds returns stabilise.

I switched all our Kiwisavers to cash a while back. I figure anyone with a horizon of 15+ years would do well to ride the bull markets for a reasonable (low risk) length of time, switch to cash, wait for the next 40%+ crash and then switch back to growth once you see the up trend start again. Repeat, repeat, repeat and I would have thought you would do pretty well. You have to accept you will miss out on some of the bull run, and you have to have the ballz to get in again when stocks are down, but I think thats the best option.

[smpl]

You need to consider dividends here, look at a total return discount to understand the opportunity cost. Also what does your provider do with currency hedging for the growth assets? You might find you will be buying the NZD at a low with such ^ a strategy.

[twotic]

You need to consider dividends here, look at a total return discount to understand the opportunity cost. Also what does your provider do with currency hedging for the growth assets? You might find you will be buying the NZD at a low with such ^ a strategy.

Sorry, was that post to me or someone else?

[Aaron]

I switched all our Kiwisavers to cash a while back. I figure anyone with a horizon of 15+ years would do well to ride the bull markets for a reasonable (low risk) length of time, switch to cash, wait for the next 40%+ crash and then switch back to growth once you see the up trend start again. Repeat, repeat, repeat and I would have thought you would do pretty well. You have to accept you will miss out on some of the bull run, and you have to have the ballz to get in again when stocks are down, but I think thats the best option.

Amen to that I switched to 100% cash some time ago and am still waiting for the 40%+ crash. If it happens I am a genius, if it doesn't I will continue to look silly. The kids are still in balanced funds as the amount of capital isn't large and there may be some truth to diversify and hold for the long term, specially as I am wrong a lot of the time.

[twotic]

Amen to that I switched to 100% cash some time ago and am still waiting for the 40%+ crash. If it happens I am a genius, if it doesn't I will continue to look silly. The kids are still in balanced funds as the amount of capital isn't large and there may be some truth to diversify and hold for the long term, specially as I am wrong a lot of the time.

There will be a crash mate, don't worry about that. The key is to have patience! I;m pretty sure China will be the catalyst for the next one, but when that will happen is anyones guess.

[macduffy]

There will be a crash mate, don't worry about that. The key is to have patience! I;m pretty sure China will be the catalyst for the next one, but when that will happen is anyones guess.

Reminds me of the classic 1940's novel, The Tartar Steppe, about the young officer who spent his life in a border outpost, waiting for an enemy who never arrived - that is, they didn't appear until he was terminally ill and unable to do anything about defending the fort...........

Nothing to do with investing longterm, of course.

[Baa_Baa]

Surprises me how little, or few people have anything to say about their Kiwisaver allocations in the face of a potential bear market. I wonder if that will change when they recieve their infrequent performance reports and find that they are going backwards rapidly.

[macduffy]

Surprises me how little, or few people have anything to say about their Kiwisaver allocations in the face of a potential bear market. I wonder if that will change when they recieve their infrequent performance reports and find that they are going backwards rapidly.

Would it be crediting the average Kiwisaver investor with too much savvy for realising that their investment is a longterm proposition that will experience multiple bull and bear markets before they get to retirement?