One of the questions I get asked most often is:

"How do I know if I'm in the right KiwiSaver fund?"

It's a good question, because choosing a KiwiSaver fund isn't really about finding the "best" fund. It's about finding the fund that is appropriate for you, your goals, and your timeframe.

That's where your risk profile comes in.

What Is a Risk Profile?

A risk profile helps determine how much risk is appropriate for you when investing.

At DecisionMakers, we ask clients to complete a risk profiling questionnaire. We use a system called FinaMetrica, an internationally recognised risk-profiling tool.

The purpose isn't to put you in a box. It's to help determine the type of portfolio or KiwiSaver fund that best suits your situation.

For some people, that might be a high-growth fund. For others, it could be a growth fund, balanced fund, or something more conservative.

Getting this right is an important part of investing.

Why Does Risk Matter?

When financial advisers think about risk, we're often thinking about timeframes.

Someone who has many years before they need access to their money can usually take a different level of risk than someone who may need that money sooner.

KiwiSaver is a little different because, for most people, the money is locked away until age 65 unless they're using it for a first-home withdrawal.

That longer timeframe often means people can take more risk within KiwiSaver than they might be comfortable taking with money they need access to in the short term.

The important thing is making sure the level of risk matches both your circumstances and your comfort level.

What Is the Difference Between Growth and Balanced Funds?

A growth fund generally contains a higher proportion of shares, along with other asset classes.

A balanced fund usually contains a mix of shares and more of the defensive assets such as fixed interest and cash.

Shares are included because they help grow your money over time and help keep pace with inflation.

Fixed interest and cash provide more stability and can make the overall portfolio less volatile.

Neither option is automatically better.

The right choice depends on your individual situation.

Why Asset Allocation Matters

Asset allocation is simply how a portfolio is divided between different types of investments.

For example:

• Shares
• Property
• Infrastructure
• Fixed interest

Research has consistently shown that the way a portfolio is divided between these different asset classes has a significant impact on both risk and long-term returns.

That's why asset allocation is such an important part of the advice process.

It's also why we regularly review portfolios to make sure they remain fit for purpose.

Recently, I met someone whose asset allocation hadn't been reviewed in over ten years. Life changes. Markets change. Goals change.

What was appropriate ten years ago may not be appropriate today.

A Common Mistake I See

One of the biggest mistakes I see is people reducing all the risk in their KiwiSaver when they reach age 65.

While everyone's situation is different, many people will spend 20 years or more in retirement.

That's a long time.

If all of your money is moved into cash, you may miss out on the long-term growth that helps your investments keep up with inflation.

Inflation is one of the biggest challenges retirees face because it gradually reduces what your money can buy in the future.

Why Shares Still Have a Place

People often ask why advisers recommend shares when markets go up and down.

The answer is that shares have historically grown over the long term.

There will always be periods where markets fall. That's normal.

When you zoom out and look at the bigger picture, shares have generally grown over time.

Part of the reason is that companies grow alongside inflation. As prices rise over time, businesses adapt and grow as well.

Investing in shares is one way of helping your money grow rather than simply standing still.

Why Reviewing Your KiwiSaver Matters

Choosing a KiwiSaver fund is not a one-time decision.

Your goals change.

Your circumstances change.

Your timeframe changes.

That's why reviewing your KiwiSaver and broader financial position regularly is important.

The goal isn't to react to every headline or market movement.

The goal is to make sure your investments still match what you need your money to do for you.

Frequently Asked Questions

What is a risk profile?

A risk profile helps determine how much investment risk is appropriate for your situation, goals and timeframe.

What is a risk tolerance questionnaire?

A risk tolerance questionnaire is a tool used by financial advisers to understand your comfort level with investment risk and help recommend an appropriate portfolio.

What is a growth KiwiSaver fund?

A growth fund generally has a higher allocation to shares and is designed for people with longer investment timeframes.

What is asset allocation?

Asset allocation is how your investments are divided across different asset classes such as shares, property, infrastructure and fixed interest.

Should I move my KiwiSaver to cash when I retire?

Not necessarily. Many people will spend decades in retirement and still need their investments to grow and keep pace with inflation. The right approach depends on your individual circumstances.

How often should my KiwiSaver be reviewed?

Regular reviews help ensure your fund remains appropriate for your goals, circumstances and timeframe.

Need Help Understanding Your Options?

Choosing the right KiwiSaver fund is about more than simply picking the fund with the highest recent return.

It's about understanding your risk profile, your timeframe, and what you need your money to do for you both now and in the future.

If you're unsure whether your KiwiSaver is still fit for purpose, a conversation with a qualified financial adviser can help you understand your options.

Kia ora, I'm Tanya Gilchrist, Certified Financial Planner and Financial Adviser at DecisionMakers.

I help people across New Zealand make confident financial decisions around KiwiSaver, retirement planning and investment management. My focus is always on helping clients understand their options in plain English and ensuring their long-term well-being remains at the centre of every decision.