Choosing the right KiwiSaver fund is one of the most important decisions you can make for your financial future. Many Kiwis stick with their bank’s default fund or put off reviewing their options, but the numbers show that even small differences in annual returns can add up to hundreds of thousands of dollars over time.
To illustrate the potential impact of fund choice on a KiwiSaver balance, we’ve run some numbers for “Billy” and “Sarah” using the KiwiSaver calculator on the Sorted.co.nz website (operated by the New Zealand Government’s Office of the Retirement Commissioner).
Both Billy and Sarah are 25 years old and have decided to join KiwiSaver for the first time. They are each earning $75,000 per annum and have committed to making a 3% contribution, which will be matched by their respective employers. Having just graduated from university and started new roles, neither Billy or Sarah have plans to buy a house anytime soon. So identical scenarios so far…
But… Billy selects his banks conservative fund, while Sarah does some research and selects an aggressive fund with an alternative provider.
According to Sorted, the impact of this decision on the likely value of their respective funds at age 65 is:
THAT’S A DIFFERENCE OF $242,848!
In real life, selecting the right fund for you depends on your goals, risk tolerance, and investment timeframe. It is unlikely – and in fact, ill-advised – that you will stay in the same fund type throughout your working life. However, by getting expert advice and regularly reviewing your fund, the aim should always be to maximise the returns you can receive based on your age, stage and appetite for risk.
Top performing growth and aggressive funds typically offer higher returns over the long term, though they can be more volatile in the short term than their conservative counterparts. But, if you’re decades away from retirement, the extra growth that can be gained from investing in a growth fund can significantly boost your nest egg and may be worth considering (as is illustrated by the example above).
This is why, regularly reviewing your fund is crucial. Life changes – like buying a first home, changing jobs, or getting closer to retirement – can all affect what type of fund is best for you. Many investors don’t realise that fees, performance, and risk profiles can also vary widely between providers and funds – and also don’t realise how simple it is to switch funds and/or providers.
For example, according to the Morningstar KiwiSaver Report March 2025, the difference in total returns between the lowest and highest performing aggressive funds over the last 10 years has been 2.3%, while the difference between the lowest and highest performing balanced funds has been 3.2%. And when comparing 10-year returns between the lowest performing balanced fund and highest performing aggressive fund, the 4.8% difference is even more striking, again highlighting why it is so important to be in the right fund if you are looking to maximise your returns. .
KiwiSaver is one of your most powerful tools for building wealth. Don’t let apathy or uncertainty hold you back from maximising your KiwiSaver returns. A quick review and the right advice, could literally see you able to save hundreds of thousands of dollars more for your retirement.
And if you’re worried that switching KiwiSaver providers or funds is complicated, don’t be – we can make the process smooth and simple for you!
There are no exit fees, and your savings and contributions can continue without interruption. We can help you review your current fund, compare your options, and make the switch, simply and efficiently.
If you haven’t reviewed your KiwiSaver fund in the last few years, let’s chat. A quick review could be the key to a more secure retirement. Plus… if you book a KiwiSaver review this month, you’ll go in the draw to win a month’s mortgage repayments on us (up to the value of $5,000). To book your review, click here.
The content of this article should not be taken as financial advice, or a recommendation of any financial product. These insights are based on current economic commentary, market pricing for interest rates, and our personal opinion. Threefold is not liable or responsible for any information, omissions, or errors present.