“I’ve lost $8k in the market this year.”
So says an acquaintance of mine, who’s been in the police force for a couple of years and benefited from their wicked super scheme. Something along the lines of 7.5%, matched by the employer. It’s okay, though – he still has a hefty amount left, enough for a new car, at least, and more than I’ve ever known anyone my age to have invested.
We don’t see each other often, but the conversation always turns to work and money. I don’t know if it’s because we’re the odd ones out in our crowd, working fulltime, or perhaps he likes to compare where he’s at relative to me (and it’s pretty much always going to beat me, guaranteed!).
Then another guest at the party chimed in with disbelief that people would put their money into something that could potentially LOSE what they put in. Imagine! Madness!
I tried to explain to him that if you’re going to be investing anyway, why wouldn’t you join Kiwisaver? If you’re going to be investing your money, why the hell wouldn’t you want to accept free money from your company and from the state while you’re at it? It’s about freaking time we got some sort of organised retirement scheme in place, and yet, so many are wary of it.
But there is no other way to get ahead. Keeping your money in the bank won’t keep you ahead of inflation. Property, as much as Kiwis love brick and mortar, can drop in value just like the markets can. THERE ARE NO GUARANTEES. Except the fact that NOT investing will guarantee that you won’t beat inflation in the long run. And that’s why we put our money into managed funds, or invest directly into the market, because over the long run we’re likely to make bigger returns.
Personally, I think joining KS is a no-brainer. But I understand that a lot of people don’t know about investing. Maybe their parents didn’t invest, or even save, and they go their whole lives repeating that pattern. All you can really say to them is, do you want to rely on the government in your old age? Do you trust them to look after you, and do you think superannuation is going to let you live a comfortable life?