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KiwiSaver Drops: What First Home Buyers Need to Know
•Zebunisso Alimova
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The KiwiSaver rollercoaster has been particularly steep lately, leaving many first-time home buyers in a precarious position. We're seeing clients lose thousands from their house deposits virtually overnight – one buyer recently watched $5,000 vanish from their KiwiSaver just between loan application and settlement!
What can you do if you're caught in this situation? First, review which fund your KiwiSaver is invested in immediately. If you're planning to buy within the next year, conservative or balanced funds typically make more sense than aggressive growth options. Many first-home buyers don't realise they can withdraw their KiwiSaver early through their solicitor, who provides an undertaking to hold funds in their trust account – effectively locking in your current value and preventing further losses before settlement.
While market drops create headaches for imminent buyers, there's a silver lining for long-term investors: your regular contributions are now purchasing units at discounted prices – like buying shares on sale! For those years away from needing their KiwiSaver funds, staying calm and continuing regular contributions often makes the most sense, as markets historically recover given enough time. Remember though, everyone's situation is unique, so connecting with qualified KiwiSaver advisors is crucial for personalised advice. Need help navigating these choppy waters? Reach out today and we'll connect you with professionals who can provide the specific guidance you need for your first home journey.
Hello and welcome back , kia ora . Hey , koenji , how's it going Good , how are you Wonderful . But guess what ? Big news on the block , a lot of clients are freaking out , first-time
Yes , there's been a lot of that in the market . So , yes , kiwi Saver funds have taken a wee bit of a dive , so can we get your expert opinion on that ?
Speaker 1
Now , full disclosure . I am not a financial advisor that provides KiwiSaver investment advice . So for that people need to go and see their KiwiSaver providers or investment advisors and reach out to us . We can put you to the right people . But the problem is and we've just had one last week right A first-time buyer . We did an application with a certain amount , correct , yes , and then by the time they needed to get an approval unconditional approval the KiwiSaver took a hit of $5,000 . Yes , so what can they do in that situation , you know , and that's the problem . So in that situation we were lucky enough to go back to the bank and borrow that extra $5,000 .
Speaker 2
Yes , yeah .
Speaker 1
But there might be cases where we may not be as lucky . So if you are looking to buy a house in the next six to 12 months , good suggestion right now to look back at your
KiwiSaver and see which fund are you in Yep , yep , review your fund , make sure you're on the right fund as well , just to ensure that you don't lose so much .
Speaker 2
So there's a conservative fund and then there's , you know , high risk , aggressive , aggressive fund . So obviously , aggressive is high risk , high reward . More conservative is you're just coasting at quite a balanced fund , which is where we tend to see our first home buyer sit is in that like conservative cash , sort of moderate fund side of things . So yeah , just make sure and check that you're on the right fund . Chat to your provider .
Speaker 1
Yeah , exactly . So if you haven't looked at your KiwiSaver for a while and you've done an application and you've got a house under offer , please go back and look into your KiwiSaver Now . A couple of other things that people can actually do is to withdraw their KiwiSaver with the solicitor for the deposit of the house right , and the solicitor gives the undertaking that they will keep it
in their trust account , and that's another good suggestion is to get the KiwiSaver out now with whatever you have and if it's already taken a hit , a small hit right now is much better than a larger hit , because I do have another client that reached out and in the beginning of the year I think in February he said to me look , I've already lost about four or 5K and now he's lost another 8K .
Speaker 2
Yeah , yeah , so there's been some big hits out there .
Speaker 1
And the other solution , I guess , if you can still buy a house just right off that loss , buy a house if that gives you still your five percent or ten percent deposit and just you know , eventually it will recover , yeah , at some point . Yeah now , one thing that you said was really really cool last week , which I really liked hearing you say this to a client , is when you lose money oh yeah , when it drops and you're still contributing to your kiwi saver , you're actually buying those units at a discounted price yeah , yeah and who doesn't love a sale ?
Speaker 2
we all love discounts , so yeah , so yeah , although it has dropped , you're actually you're still continuing to contribute , but you're contributing and getting those units at a discounted price .
Speaker 1
Yeah , but remember , guys , we're not financial advisors when it comes to investment . So do reach out to proper people . But this is more around . What can you do to safeguard your KiwiSaver if it is your deposit for your first home ? Now , if you've got a KiwiSaver and you're in your 50s and you've seen
it taking a dip , don't worry about it . It will bounce back because investment is a long-term game Correct .
Speaker 2
Or if you've already utilized it to buy your first home and you're still got another 30 years , like us , then you just ride the wave . Don't panic , stay calm .
Speaker 1
Yeah , but still get a professional advice , regardless of the situation .
Speaker 1
So , pros of KiwiSaver taking a hit is that you may buy the same units for a cheaper value if you're continuing to contributing to KiwiSaver , and small contributions , but regular contributions are way better than one hit once a year . So if you're self-employed , for instance , instead of doing one hit once a year to get that government top-up contribution , we recommend to do , slowly , yeah , automatic payments . Automatic payments is much better versus that . And then the cons of the KiwiSaver dropping by , I guess at the moment is , if you are in the middle of buying a house , is that you may need to hustle a little bit more and get that extra cash if your KiwiSaver has dropped significantly . So reach out to your solicitor , get that KiwiSaver out now if you can , and if you can't , then there might be other solutions for you hopefully the bank will give you a little bit more or you got some cash saving somewhere yeah , garage sale time .
Speaker 1
Yeah , time , yeah , bake sales car washes . Do whatever you can to get that extra money Awesome . Well , thank you , koenj . That has been a really quick flying by episode about what can you do to safeguard your KiwiSaver right now . Cool , thank you .
