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Banned
kiwisaver worth a punt?
There I was sipping my morning cup of tea, browsing the Dom, when I read a headline that had me spilling the stuff all over it:
Every Kiwi should take the $1000, says expert
http://www.stuff.co.nz/stuff/dominio...4a6034,00.html
$1,000 sound like a gift horse, but said expert fails to take into account the magic of compound interest! To illustrate, below is a table that shows the ammount you would get after 10, 20, 30 and 40 years assuming a DIY savings scheme earns just 1.5% more p.a. than kiwsaver. Also assumed is you contribute to the scheme the minimum ammount (4% of gross income) for just one year and take 'contribution holidays' thereafter. Figures in bold are where DIY wins out...
Income 30000 60000 90000 120000 150000
contribution 2200 3400 4600 5800 7000
(4% of gross income, including the 1,000)
Retirement payout in kiwisaver, assumed return 8.5% p.a.
10 years 4974 7687 10401 13114 15827
20 years 11247 17381 23515 29650 35784
30 years 22138 34213 46288 58363 70439
40 years 47794 73863 99933 126002 152072
Retirement payout in DIY scheme, assumed return 10% p.a.
10 years 3112 6225 9337 12450 15562
20 years 8073 16146 24219 32292 40365
30 years 20939 41879 62818 83757 104696
40 years 54311 108622 162933 217244 271556
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The Government is very keen to see that any KiwiSaver product does not fall over. They don’t want to see Mums and Dads burnt from their investment as it is the Govts attempt to encourage people into a savings routine. What this means is that the KiwiSaver products have to be low risk, which in turn means the yields have to be low.
Lovegear I think your model is interesting except the 8.5% return is too generous. Try it at current bank deposit rates.
As an aside another interesting lesson from the Government is if you do nothing you get something. Eg if you don’t save we’ll give you $1000.
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Originally Posted by minimoke
The Government is very keen to see that any KiwiSaver product does not fall over. They don’t want to see Mums and Dads burnt from their investment as it is the Govts attempt to encourage people into a savings routine. What this means is that the KiwiSaver products have to be low risk, which in turn means the yields have to be low.
Lovegear I think your model is interesting except the 8.5% return is too generous. Try it at current bank deposit rates.
Any body been burnt by chasing higher promised yields only to see the recent drop in the equity markets shave off money that has been put in?
Other threads have been quick to knock Bluechip investors and those who put their faith in finance companies for the sake of more bang for your buck. Even the mum / dad property investor is running nervously at the moment. Will KiwSaver's learn a lesson?
The government has to be hoping the market starts to swing back again shortly otherwise expect to see National use Kiwisaver to its advantage in the run up to the elections.
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Yes but you can take it out afer X years to buy your first house.
Not worth returning to NZ for though. think I will stay in London a bit longer (Australian tax rate reduction looking interesting as well).
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quote: Originally posted by CJ
Yes but you can take it out afer X years to buy your first house.
You won't be able to withdraw your $1,000. That gets locked in until retirement.
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Banned
Minimoke, I might go for it still if I can get an exposure to exotica not in my current portfolio (such as an Eastern European emerging market growth fund), but I don't suppose such things will be on offer if they are going for mediocre "balanced" funds [xx(]
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Member
Kiwisaver is utter cr*p.
It's the only reason we're facing this capital gains tax!
The Australian scheme is 10x more effective and simpler.
Savings are forced. Employers have to contribute 9% of an employees salary to a scheme. This is what is driving the Australian funds management industry.
We need a compulsory super in NZ.
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I agree TLA87 we need compulsory super.
Have recently joined my work scheme & i'm paying 5% of my salary, which gets matched by the company.
Being 30 this year, leaves me plenty of time to accumulate a decent retirement fund, & i get to choose the fund its invested in myself.
The Aussie scheme is generous, although i read that FBU has endorsed the Kiwisaver scheme & will top up its workers contributions by another 2%.
I hope the Govt looks at tax breaks/incentives for employers to assist there staff with super contributions.
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Look forward to Stage Two – which will be the introduction of compulsory employer contributions. Stage One KiwiSaver will put in place all the infrastructure that is necessary – a simple piece of legislative change is all that will follow. Stage Three will be compulsory employee contributions.
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Back in 2006 I made this prediction.
Originally Posted by minimoke
Look forward to Stage Two – which will be the introduction of compulsory employer contributions. Stage One KiwiSaver will put in place all the infrastructure that is necessary – a simple piece of legislative change is all that will follow. Stage Three will be compulsory employee contributions.
Since then we have seen the introduction of compulsory employer contributions. We are shortly going to see those employer contributions go up and employee contributions will go up as the government removes itself from the funding equation. we aren't far away from Stage three.
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