Quote Originally Posted by SBQ View Post
I'll have to admit i'm not in a NZ position to invest in Kiwi Saver as my wife would be. Fortunately my father lives abroad where we can manage our investments jointly. So our NZ household savings take a different path ; which i've strongly advised the wife not to join Kiwi Saver. If there were prospecting shares (or managed funds) in NZ that would be attractive, we would of done so. But for the past 15+ years, we've pretty much done better by simply buying none other than "Berkshire Hathaway".

Most people in NZ have never heard of the company. They don't even know who Warren Buffet is. But time and time again Buffet has said you're playing a fools game if you can time markets when to buy or sell or know when to be in cash or bonds (hence the behaviour actively managed funds practice). He says, "That's not how you get rich in this industry... you can't tell your clients to go put their $ in the index fund because how else would they (the financial advisors) get paid? .. That's not how the system works".

From a performance point of view, tt's a shame that the default Kiwi Saver funds 'net of fees' isn't doing any better than what the banks pay in term deposit. Of course, interest income is taxed at marginal tax rates but on a cumulative basis it might be very comparable? I recall during the Hanover Finance era banks were paying over 9% on term deposits.
I have heard of Berkshire Hathaway - despite their history they haven't done any better than the S&P500 over the last decade at least. Their size is such that they're unlikely to outperform going into the future (especially as their secret sauce is likely to retire/die soon). Buffet himself has said on his death he will advise his wife to invest in the cheapest share tracker she can find. If your wife is able to get employer matching, you will not find an easier way to outperform. Even if not, may as well stick $1k in each year and get the member tax credit. The only downside is your money is locked up until 65, which is why I put in a minimum required to get the benefits and any extra cash goes elsewhere.

I agree, the default funds are not doing very well - I guess the decision was made to assume people want a conservative fund by default, so the default funds are in invested in about 80% cash and bonds. Sadly only a minority will ever question this and stick their money somewhere more appropriate.