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  1. #76
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    Nov 2018
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    Quote Originally Posted by mfd View Post
    13 years is a strange timeline. Here's my source

    https://seekingalpha.com/article/415...vs-s-and-p-500

    Looks like they did well around 2007 which bumps up your quoted 13 year returns. The trend is pretty clearly towards matching the market in the future, as you'd expect as the size of the company increases. Not a terrible place for your money, but don't expect the future returns to look like the past.

    I can fully understand not wanting to be in kiwisaver if it's too inflexible. On a pure financial returns basis, I will take it over Berkshire anyday due to my employer and the tax man more than doubling all my contributions.
    The author's can pick the timeline to suit what every spin they want, also I would question where that SeekingAlpha link gets it's data from as their chart doesn't seem to reflect what I posted.

    The employer matching of contributions is not always double. The minimum is 3% of person's income and the employer doesn't have to match any higher if the employee chooses to contribute more (up to 8% - a far cry from 18% that Canada allows).

    My notion is at the minimum, the 3% matching contributions can easily be eaten up by the fund's mgt fees and this you lose out on compounding returns. More importantly, contributions only come if you're employed. What does that leave to those with disabilities or on the benefit? This is why I wonder if the NZ gov't would of been better to boost their superannuation pension fund by directly buying the S&P500 index so that everyone will see the benefit at retirement. Not just those that are able to work.

  2. #77
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    Join Date
    Jan 2014
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    140

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    Quote Originally Posted by SBQ View Post
    The author's can pick the timeline to suit what every spin they want, also I would question where that SeekingAlpha link gets it's data from as their chart doesn't seem to reflect what I posted.

    The employer matching of contributions is not always double. The minimum is 3% of person's income and the employer doesn't have to match any higher if the employee chooses to contribute more (up to 8% - a far cry from 18% that Canada allows).

    My notion is at the minimum, the 3% matching contributions can easily be eaten up by the fund's mgt fees and this you lose out on compounding returns. More importantly, contributions only come if you're employed. What does that leave to those with disabilities or on the benefit? This is why I wonder if the NZ gov't would of been better to boost their superannuation pension fund by directly buying the S&P500 index so that everyone will see the benefit at retirement. Not just those that are able to work.
    Technically I agree, high fees could eat up the contributions. However, if I do a back of the envelope calculation of a 7% return without matching, versus a 6% return with employer matching (1% fee, so three times what I pay), the matched scenario wins until you get to 90 years from your first contribution. In reality, the matching far outweighs the cost of the fees. Even a 2% fee wins for 50 years.

    As I said, I only contribute 3% as that is all that is matched. Savings above this go elsewhere. If the matching increased, I would put in more to maximise this

    Fully agree the system is not well setup for those who don't earn much or don't work at all, but that doesn't change my response to the incentives.

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