Being Envious of Other Investors

[donthatetheplayer]

Agree kiwisaver is good. I contribute $1040 each year. Government chips in $520. An immediate 50% return for my investment. Better than Auckland property! It alone won't make me rich but as a smart investment decision it's a no brainer! Even better with the circa 16% annual returns I've been getting.

Wife does the same as me. Kids are all in it. $1,000 each from the government when we all joined. What's not to like?

[PTWhatAGreatForum]

Kiwisaver? Seriously??

The cold day in hell (when I agree with Damap) has clearly arrived.

Kiwisaver, like it's Australian "compulsary super" counterpart is a racket designed to support companies in dipping into your pocket and taking money from you.

[Courham]

Michael. 3% of my income per year is nothing, could blow that on lotto tickets and get exactly 0 return on it.

When I joined thought it would be a have but hey, worth a crack. I'm no worse off for putting 3 or 4% of my income into it and getting my employer to put 3% and the gov't a bit more. My only concern is by the time I "officially" retire (i.e. turn 65) is kiwisaver will be part of means testing for entitlement for super, but I don't care I've got my rentals and that has always been what I intended to live off.

NZ has a piss poor saving record- kiwisaver has been one of the few initiatives in the past 10 years (or more) to actually encourage some savings for retirement, that fact young people can use it to get a first property is an even better reason to join. But hey, myself and 269,999 other members could all be wrong.

Michael, keep up your faith in the universal super ann being round to look after you, me I'm working on providing or myself.

Craig

[Frezzinghot]

Does kiwi saver give you a better ROI than paying it on your mortgage? if so I am all for it.

FH

[Courham]

I haven't had a mortgage on my PPOR in 15 years.

Craig

[donthatetheplayer]

That depends FH. I just pay the minimum to get the government contribution. In my situation yes it does.

[Frezzinghot]

Fair enough, I guess what I am really asking is can the money you pay to kiwisaver best used elsewhere or is the ROI on this money to good to pass up. Can you only gain access to the kiwisaver funds when you retire?

[Damap]

But it's not true that it's better than Auckland property Donthate.

If I buy an Auckland property for let's say 500K and I have to top it up by said $1000 a year then I am getting (conservatively) a 2500% return on my $1000. (Assuming only 5% growth in value)
The KS cash isn't even inflation proofed.
I just can;t see why anybody would "waste" the money. In Oz where their system is well advanced the savvy ones take their money out and invest in real estate to leverage the growth because cash just gets eroded by inflation even with government assistance.

[Courham]

I guess Freezinghot that is a decision each person needs to make. It is easy for people living in Auckland, making good capital gains out of property, to focus on property only as they see their retirement nest egg growing rather quickly

Personally, I think the gov't and employer contributions equalling your own 3% contributions make it a nobrainer. For many people wanting to get into property, or own their own house, the current LVR rules make it very difficult to get the deposit together- but if you are 16-18 and starting out in the work force (full or part time), or early 20s, in 5-7 years your kiwisaver contributions could make all the differnce in having a deposit or not The problem in this country is nobody wants to look further than tomorrow or next week, and no longer seem prepared to graft and save to get to their goals in a few years time.

Craig

[Damap]

I think that comes largely Craig from the sense of despair that saving will never help you as Auckland prices are moving too fast. Culturally we have never been savers really in NZ have we?

[andyp2010]

The problem is that it's 100% illiquid until you reach an arbitrary age, which for my generation will probably end up being about 85. I'm not waiting 60 years for a return on my investment, which as damap said, isn't inflation proof.

There was a really good bit in one of dolf de roos books about how kiwisaver can only last you ten years at a push. I'm surprised anyone on here would put into it unless you're buying your first home.

[klauster]

The KIWI saver concept is good, doing something will support Kiwi families and is better than not saving at all. On the other hand - the risks with managed funds are obvious. But in your case it depends on your circumstances.

It’s the same with property investments, when you get a return of 12% I would not expect that I get the 12% as well (or vice versa). The same principle applies to household spending. People who drive a Ferrari spend little bit more than others driving a Mini for the same distance.

If KS meets your needs, DO IT, if properties are better for you DON’T HESITA. Finding out what is better for you, is an individual problem. Comparing KS with capital gain or something else that might happen or not in future is speculation.

[BigDreamer]

I'm all for kiwisaver but always have a doubt in the back of my mind that current and/or future governments will change it completely rendering it useless.

[Perry]

You are too young to let envy poising your life.
Take your time and don’t forget, what you miss in young age you never get it back.

I'm sure there are a number of posters on here who are envious to read
a 20-something year old already starting to invest in property.

Two sagacious observations. That you have started at
the age you say, puts you ahead of almost all of the
rest of the 'great unwashed' who don't even know
about it, let alone where to start.

Jouney of thousand miles start with first step.

Many people stumble over the truth, then pick them-
selves up and hurry off as if nothing had happened.

[klauster]

Being envious or being ahead of others – true, if you take life as a competition (with a high rate of fatalities). But life is a matter of good health, endurance and enjoyment.

From homeowner's point of view (note the difference to investors), people borrow huge amounts because of fear to miss out, but in reality they pay on a 30y mortgage only on interests possibly 800k (check it out with a mortgage calculator).

If you are focused on a career that pays you a comfortable life you could use that sort of money (other people waste paying to the bank) for yourself (e.g. 800k interests 400k principals) to invest for a decent return and live happily in an early retirement, as I did.