kiwisaver worth a punt?

[Zaphod]

Zaphod in the first year on minimum contributions they are correct pay in $1040 get $1040 tax credit plus $1000 kickstart is well over 100% return

That is only the case in the first year and only if your 4% contribution amounts to the same value as the $20pw + kickstart (and shortly + employer contribution) that the taxpayer contributes. Subsequent years see a quick decline back to far below 100%.

This is not an investment which returns an ongoing 100%+ PA as claimed by some.

[POSSUM THE CAT]

Zaphod if you want a fine calculation on $20 or below per week if you work on per annum from contribution dates with the bonus $1000 and the continuing tax credits and a small allowance for capital increase you could come to roughly 100%per annum return averaged over 10 years. It is avery complex calculation and depends on dates when everything is paid.

[777]

Zaphod if you want a fine calculation on $20 or below per week if you work on per annum from contribution dates with the bonus $1000 and the continuing tax credits and a small allowance for capital increase you could come to roughly 100%per annum return averaged over 10 years. It is avery complex calculation and depends on dates when everything is paid.

Can't agree Possum.

If you put $1,042 in per annum, get your $1,042 from the government and $1,042 from your employer and the one off $1,000 then with no return on the money you would have $32,260 total for an input of $10,420 after 10 years. No way this comes close to 100% return per annum.

Put simply if you invested one payment of $1,040 at 100% per year then it doubles each year so would end up at $1,067,008 after 10 years which is nothing like the $32,260 above. And that is just with one payment of $1,040.

I am with Zaphod on this one.

[POSSUM THE CAT]

777 you are compounding the total sums for evey year not working on your contributions when they were actually contributed. As I said it is not a simple calculation. It is a return on your money from when you paid it not on the total sum.

[Zaphod]

777 you are compounding the total sums for evey year not working on your contributions when they were actually contributed. As I said it is not a simple calculation. It is a return on your money from when you paid it not on the total sum.

Surely the overall return on investment (which includes the compounding sum) is more relevant measure to compare your return than the method used above which excludes the money already contributed.

From a personal perspective, I'm interested in the overall gain I receive throughout the lifetime of the investment.

[POSSUM THE CAT]

Zaphod they are working on the compounding return on your actual contributions to show the actual benefit to you this is common way of showing return on supplemented financial products.

[minimoke]

In Year One you can assume you’ll make fantastic returns – 100% + no trouble. Its further out that can ‘t be calculated.

The Tax payer contributions are not sustainable. They will be phased out. If not next year then perhaps the year after.

Fund fees will rise. Existing providers with high fees are already eroding your returns.

Returns on investment should not be assumed to be positive every year.

Employer tax credits are not sustainable – they too will disappear. This will put pressure in pay rises – so you need to factor in a lost opportunity cost from your pay.

Add in the cost of your time you will take when you move to another provider. You will move Providers and there will be a cost.

Jump in now while the goodies are there. If you leave it a year your returns won’t be as good as they could have been.

[Zaphod]

Zaphod they are working on the compounding return on your actual contributions to show the actual benefit to you this is common way of showing return on supplemented financial products.

That's a marketing tactic that provides a figure which bears very little resemblance to the actual value of the investment over time.

Minimoke - I agree, things will change in the future, and the overall benefit of the scheme is difficult to calculate due to the reasons you've outlined. My only comment on this is that people do need to think thoroughly about their circumstances and provider before making a decision. I have spoken with many who have rushed into the scheme.

[minimoke]

I have spoken with many who have rushed into the scheme.

There’s not too many problems rushing in at this stage. A person can stop contributions in a year and can change provider any time – hopefully they can afford their contribution and won’t get stung to badly by changing.

[Mick100]

what's the story with tax with regards to kiwi saver

I can't see anything in my tax return with regards to rebates etc

are their any tax advantages for the self employed with kiwisaver?

thanks
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