1 00:00:01,040 --> 00:00:04,960 Speaker 1: You're listening to a Shasese podcast, which often get a 2 00:00:05,040 --> 00:00:07,640 Speaker 1: question should I be paying off my mortgage or should 3 00:00:07,720 --> 00:00:10,440 Speaker 1: I be contributing to key we Saver, And obviously you 4 00:00:10,440 --> 00:00:12,840 Speaker 1: should be contributing to key we Saver, But then it's 5 00:00:12,880 --> 00:00:15,000 Speaker 1: how much and what's my emphasis? 6 00:00:15,360 --> 00:00:18,640 Speaker 2: Yeah, So, as a general rule, you contribute to key 7 00:00:18,640 --> 00:00:21,520 Speaker 2: we Saver if you're not in financial hardship, and you 8 00:00:21,560 --> 00:00:25,160 Speaker 2: contribute up to the level that your employer matches. If 9 00:00:25,160 --> 00:00:27,560 Speaker 2: you're self employed, there isn't that much of an incentive 10 00:00:27,640 --> 00:00:31,920 Speaker 2: to contribute beyond what the government will unlock the attacks 11 00:00:32,000 --> 00:00:34,800 Speaker 2: credit for you. But let's say it's three percent. So 12 00:00:34,840 --> 00:00:37,479 Speaker 2: if you had money outside of that, then the question is, well, 13 00:00:37,479 --> 00:00:41,479 Speaker 2: what do I do with it? Well, yes, you could 14 00:00:41,479 --> 00:00:43,800 Speaker 2: put it into key we Saver, and I guess that's 15 00:00:43,800 --> 00:00:47,000 Speaker 2: a form of compulsory saving. But that is assuming that 16 00:00:48,479 --> 00:00:52,360 Speaker 2: you haven't purchased your first home, I guess, And you 17 00:00:52,400 --> 00:00:56,160 Speaker 2: don't need that money for retirement. I guess it protects it, 18 00:00:56,160 --> 00:00:59,000 Speaker 2: it locks it in a vault for you. But for 19 00:00:59,120 --> 00:01:01,440 Speaker 2: most of us, the clients that I'm working with, I 20 00:01:01,440 --> 00:01:04,920 Speaker 2: can put that money to work a lot faster and 21 00:01:04,959 --> 00:01:06,600 Speaker 2: a lot harder than if it was left in a 22 00:01:06,680 --> 00:01:10,480 Speaker 2: kiwisaver fund. So contributing up to the level your employer matches, 23 00:01:10,800 --> 00:01:14,800 Speaker 2: absolutely could put that into Kiwisaver. It's the extra contribution 24 00:01:14,920 --> 00:01:20,679 Speaker 2: that I'm I'm wary of because if I can put 25 00:01:20,680 --> 00:01:24,440 Speaker 2: that money towards paying your mortgage off faster, not only 26 00:01:24,480 --> 00:01:28,520 Speaker 2: are we creating flexibility and financial resilience now that you 27 00:01:28,560 --> 00:01:31,160 Speaker 2: can benefit, but we're creating equity and your property as 28 00:01:31,200 --> 00:01:34,399 Speaker 2: well that we could recycle as a deposit for an 29 00:01:34,440 --> 00:01:37,160 Speaker 2: investment property. And so then you've got kind of three 30 00:01:37,280 --> 00:01:41,039 Speaker 2: layers working hard for you. You've got your this greater 31 00:01:41,160 --> 00:01:44,840 Speaker 2: cash surplus, which increases your resilience, which means you can 32 00:01:44,920 --> 00:01:50,160 Speaker 2: weather storms more comfortably. We've got your mortgage coming down, 33 00:01:50,200 --> 00:01:53,320 Speaker 2: which is saving you interest costs, getting you mortgage free faster, 34 00:01:53,840 --> 00:01:56,080 Speaker 2: and also creating equity in your home. And then we're 35 00:01:56,120 --> 00:01:59,360 Speaker 2: tapping into that equity as a deposit for an investment property. 36 00:01:59,520 --> 00:02:03,120 Speaker 2: Those three things will outperform any ke we Saver investment 37 00:02:03,240 --> 00:02:05,280 Speaker 2: kind of any day of the week, any extra key 38 00:02:05,320 --> 00:02:07,840 Speaker 2: we Saver investment beyond what your employer matches. 39 00:02:09,040 --> 00:02:11,519 Speaker 1: But the beauty of compound interest, obviously you need to 40 00:02:11,560 --> 00:02:14,119 Speaker 1: be contributing something though so that you can take advantage 41 00:02:14,120 --> 00:02:14,520 Speaker 1: of time. 42 00:02:15,600 --> 00:02:19,400 Speaker 2: Yes, but yes, but I do think that the benefit 43 00:02:19,440 --> 00:02:22,320 Speaker 2: of ki We saver isn't really the compound interest, and 44 00:02:22,360 --> 00:02:25,400 Speaker 2: it isn't really time. It's the fact that your employer 45 00:02:25,600 --> 00:02:29,040 Speaker 2: is contributing, so you're getting one hundred percent return. That 46 00:02:29,200 --> 00:02:32,400 Speaker 2: is the beautiful thing. The actual fund that you're investing 47 00:02:32,480 --> 00:02:35,400 Speaker 2: in after inflation in some of those things might actually 48 00:02:35,440 --> 00:02:39,320 Speaker 2: give quite a poor return, but getting access to that 49 00:02:39,400 --> 00:02:44,239 Speaker 2: employer money is the golden ticket for Kiwi saver. So yes, 50 00:02:44,639 --> 00:02:47,360 Speaker 2: having it locked up so you can't touch it is 51 00:02:47,400 --> 00:02:51,800 Speaker 2: also helpful because you don't inadvertently fritter it away. But 52 00:02:52,760 --> 00:02:54,920 Speaker 2: it's more that it's just locked up for a long 53 00:02:54,960 --> 00:02:58,000 Speaker 2: period of time rather than the based performance of the fund, 54 00:02:58,000 --> 00:03:01,000 Speaker 2: which is where I guess that compounding concept comes in. 55 00:03:01,800 --> 00:03:04,160 Speaker 1: What are some of the biggest mistakes Then you see 56 00:03:04,160 --> 00:03:04,919 Speaker 1: that people make. 57 00:03:05,080 --> 00:03:10,560 Speaker 2: I think a lot of Kiwis are sleep walking towards 58 00:03:11,760 --> 00:03:18,880 Speaker 2: their retirement and there's sort of this hope that it'll 59 00:03:18,919 --> 00:03:22,720 Speaker 2: be okay. They were brought up by parents or grandparents 60 00:03:22,840 --> 00:03:26,200 Speaker 2: where it was okay, so you could see why they 61 00:03:26,240 --> 00:03:31,160 Speaker 2: would make that conclusion. But for most of us that 62 00:03:31,320 --> 00:03:33,680 Speaker 2: isn't going to be the case, and so then you say, well, 63 00:03:33,720 --> 00:03:37,200 Speaker 2: what is not being okay actually mean? Because no one's 64 00:03:37,320 --> 00:03:39,840 Speaker 2: dying as a result of not having their retirement, but 65 00:03:39,920 --> 00:03:43,040 Speaker 2: the impact of not having enough save for your retirement 66 00:03:43,080 --> 00:03:47,200 Speaker 2: and Kiwi saber normally accounts for around forty percent of 67 00:03:47,200 --> 00:03:50,440 Speaker 2: what you are likely to need for retirement. So it's helpful, 68 00:03:50,800 --> 00:03:53,800 Speaker 2: but it's not the silver bullet. It's better than no bullet, 69 00:03:54,440 --> 00:03:56,120 Speaker 2: but it's not the silver bullet. I've got to work 70 00:03:56,120 --> 00:03:57,880 Speaker 2: out what to do with the rest. So if you 71 00:03:57,920 --> 00:04:00,360 Speaker 2: haven't been able to amass the rest of them money 72 00:04:00,360 --> 00:04:03,440 Speaker 2: that you needed, then it just is going to mean, well, 73 00:04:03,480 --> 00:04:06,040 Speaker 2: you're going to need to downsize your home earlier, you 74 00:04:06,120 --> 00:04:08,800 Speaker 2: might need to work longer, You're unlikely to have the 75 00:04:08,840 --> 00:04:10,960 Speaker 2: retirement you want, or be able to help the kids 76 00:04:10,960 --> 00:04:13,320 Speaker 2: as you expect it. I don't think any of those 77 00:04:13,360 --> 00:04:16,360 Speaker 2: things are literally the end of the world, but it 78 00:04:16,440 --> 00:04:19,880 Speaker 2: is disappointing, I think for many of us when we 79 00:04:20,000 --> 00:04:23,200 Speaker 2: know that we have earned good income, so why is 80 00:04:23,240 --> 00:04:27,839 Speaker 2: that our financial reality Investing involves risk you might lose 81 00:04:27,880 --> 00:04:30,760 Speaker 2: the money you start with. We recommend talking to a 82 00:04:30,839 --> 00:04:35,440 Speaker 2: licensed financial advisor. We also recommend reading product disclosure documents 83 00:04:35,560 --> 00:04:37,120 Speaker 2: before deciding to invest,