Speaker 1: You're listening to a Shasese podcast, which often get a
Speaker 1: question should I be paying off my mortgage or should
Speaker 1: I be contributing to key we Saver, And obviously you
Speaker 1: should be contributing to key we Saver, But then it's
Speaker 1: how much and what's my emphasis?
Speaker 2: Yeah, So, as a general rule, you contribute to key
Speaker 2: we Saver if you're not in financial hardship, and you
Speaker 2: contribute up to the level that your employer matches. If
Speaker 2: you're self employed, there isn't that much of an incentive
Speaker 2: to contribute beyond what the government will unlock the attacks
Speaker 2: credit for you. But let's say it's three percent. So
Speaker 2: if you had money outside of that, then the question is, well,
Speaker 2: what do I do with it? Well, yes, you could
Speaker 2: put it into key we Saver, and I guess that's
Speaker 2: a form of compulsory saving. But that is assuming that
Speaker 2: you haven't purchased your first home, I guess, And you
Speaker 2: don't need that money for retirement. I guess it protects it,
Speaker 2: it locks it in a vault for you. But for
Speaker 2: most of us, the clients that I'm working with, I
Speaker 2: can put that money to work a lot faster and
Speaker 2: a lot harder than if it was left in a
Speaker 2: kiwisaver fund. So contributing up to the level your employer matches,
Speaker 2: absolutely could put that into Kiwisaver. It's the extra contribution
Speaker 2: that I'm I'm wary of because if I can put
Speaker 2: that money towards paying your mortgage off faster, not only
Speaker 2: are we creating flexibility and financial resilience now that you
Speaker 2: can benefit, but we're creating equity and your property as
Speaker 2: well that we could recycle as a deposit for an
Speaker 2: investment property. And so then you've got kind of three
Speaker 2: layers working hard for you. You've got your this greater
Speaker 2: cash surplus, which increases your resilience, which means you can
Speaker 2: weather storms more comfortably. We've got your mortgage coming down,
Speaker 2: which is saving you interest costs, getting you mortgage free faster,
Speaker 2: and also creating equity in your home. And then we're
Speaker 2: tapping into that equity as a deposit for an investment property.
Speaker 2: Those three things will outperform any ke we Saver investment
Speaker 2: kind of any day of the week, any extra key
Speaker 2: we Saver investment beyond what your employer matches.
Speaker 1: But the beauty of compound interest, obviously you need to
Speaker 1: be contributing something though so that you can take advantage
Speaker 1: of time.
Speaker 2: Yes, but yes, but I do think that the benefit
Speaker 2: of ki We saver isn't really the compound interest, and
Speaker 2: it isn't really time. It's the fact that your employer
Speaker 2: is contributing, so you're getting one hundred percent return. That
Speaker 2: is the beautiful thing. The actual fund that you're investing
Speaker 2: in after inflation in some of those things might actually
Speaker 2: give quite a poor return, but getting access to that
Speaker 2: employer money is the golden ticket for Kiwi saver. So yes,
Speaker 2: having it locked up so you can't touch it is
Speaker 2: also helpful because you don't inadvertently fritter it away. But
Speaker 2: it's more that it's just locked up for a long
Speaker 2: period of time rather than the based performance of the fund,
Speaker 2: which is where I guess that compounding concept comes in.
Speaker 1: What are some of the biggest mistakes Then you see
Speaker 1: that people make.
Speaker 2: I think a lot of Kiwis are sleep walking towards
Speaker 2: their retirement and there's sort of this hope that it'll
Speaker 2: be okay. They were brought up by parents or grandparents
Speaker 2: where it was okay, so you could see why they
Speaker 2: would make that conclusion. But for most of us that
Speaker 2: isn't going to be the case, and so then you say, well,
Speaker 2: what is not being okay actually mean? Because no one's
Speaker 2: dying as a result of not having their retirement, but
Speaker 2: the impact of not having enough save for your retirement
Speaker 2: and Kiwi saber normally accounts for around forty percent of
Speaker 2: what you are likely to need for retirement. So it's helpful,
Speaker 2: but it's not the silver bullet. It's better than no bullet,
Speaker 2: but it's not the silver bullet. I've got to work
Speaker 2: out what to do with the rest. So if you
Speaker 2: haven't been able to amass the rest of them money
Speaker 2: that you needed, then it just is going to mean, well,
Speaker 2: you're going to need to downsize your home earlier, you
Speaker 2: might need to work longer, You're unlikely to have the
Speaker 2: retirement you want, or be able to help the kids
Speaker 2: as you expect it. I don't think any of those
Speaker 2: things are literally the end of the world, but it
Speaker 2: is disappointing, I think for many of us when we
Speaker 2: know that we have earned good income, so why is
Speaker 2: that our financial reality Investing involves risk you might lose
Speaker 2: the money you start with. We recommend talking to a
Speaker 2: licensed financial advisor. We also recommend reading product disclosure documents
Speaker 2: before deciding to invest,