Introduction: The Invisible Cost of Apathy
In the world of finance, we are often told that “taking a risk” is what loses you money. We are taught to be cautious, to avoid “gambling” on the markets, and to play it safe. But there is a different kind of risk—one that is far more insidious because it doesn’t look like a mistake. It looks like “doing nothing.”
Most New Zealanders are enrolled in KiwiSaver. It is arguably the most successful social and financial project in our country’s recent history. Yet, a staggering number of people are still sitting in “Default” funds—the funds they were automatically placed into when they started their first job.
At Axico, our message is clear: Doing nothing is still a decision. And in the context of your KiwiSaver, it is often a multi-hundred-thousand-dollar decision.
The $44,000 Comparison (And Why It’s Only the Tip of the Iceberg)
In our strategy sessions, we often use a 10-year example to show the immediate impact of fund choice.
- Starting Balance: $20,000
- Monthly Contribution: $500
- Default Fund (approx. 5% p.a.): ~$122,000 after 10 years.
- Aggressive Growth Fund (approx. 11% p.a.): ~$166,000 after 10 years.
The difference—$44,000—is significant. It’s a kitchen renovation. It’s a significant chunk of a first-home deposit. It’s a year of traveling.
But here is the part most people miss: The gap doesn’t grow linearly; it grows exponentially. If you extend that timeframe to 30 years, that $44,000 gap doesn’t just triple; it can blow out to $400,000 or $500,000.
By “doing nothing” and staying in a fund designed for neutrality, you aren’t avoiding risk. You are locking in a lower trajectory for your entire life. You are deciding, today, that your 65-year-old self deserves half the wealth they could have had.
Why Default Funds Exist (And Why They Aren’t for You)
Default funds serve a purpose in the system. They are designed to be “safe” harbors for people who haven’t made a choice. They are generally conservative, focusing on cash and bonds to ensure that the balance doesn’t fluctuate wildly.
This is great if you are 64 years old and need that money next year. It is a disaster if you are 25, 35, or 45.
Default funds are generalized starting points. But as we often tell our clients: General rarely builds exceptional outcomes. Exceptional outcomes require alignment. They require a fund that is built around your income, your risk tolerance, and your specific timeline.
First Home vs. Retirement: The Divergent Strategies
One of the unique aspects of KiwiSaver is that it serves two masters: your first home and your retirement. These require completely different strategies.
For First Home Buyers: If you are planning to buy a home in the next 18 months, an Aggressive Growth fund is a massive risk. If the market dips 10% the month before you find your dream home, your deposit just evaporated. In this stage, we focus on certainty. We look for funds that protect your capital so that when the right house appears, the money is there.
For Retirement Planning: If your goal is 20 years away, “certainty” is your enemy. You need volatility to work in your favor. You want to buy more units when the market is down so that you benefit when it recovers. We help you work backwards. We ask: How much would you actually like in that account at retirement? Then we build the strategy to get there. Without a target, you’re just guessing.
The Myth of “Managing Yourself”
Many people think that because they have an app on their phone, they are “managing” their KiwiSaver. They see the balance go up and down and feel like they are in control.
But choosing a fund is only 20% of the battle. The other 80% is Alignment. * Does your KiwiSaver provider offer the best fee structure for your balance?
- Is your contribution level optimized for your tax bracket?
- How does your KiwiSaver balance affect your mortgage “servicing” capacity when you go to buy a home?
Because Axico integrates lending, protection, and investments, we don’t look at KiwiSaver in a vacuum. We look at it as a lever for your entire strategy.
Contribution Strategy: Behavior vs. Math
We often have a very honest conversation with our clients about discipline. Strategy only works if behavior supports it. If you are someone who struggles to save, KiwiSaver is your best friend because it is “locked.” We might recommend maximizing your contributions there because you “can’t” touch it.
However, if you are highly disciplined, it might make more sense to contribute the minimum required to get the government and employer match, and then redirect your surplus into a managed fund that offers more flexibility and liquidity. This allows you to build an “Emergency Fund” or a “Mortgage Pivot” fund while still growing your long-term wealth.
Beyond KiwiSaver: The Flexibility Factor
KiwiSaver has restrictions. You can’t touch it until you buy a home or turn 65. For many of our clients, life happens in the middle.
Maybe you want to start a business at age 45. Maybe you want to fund a child’s university education at age 50. This is where managed funds outside of KiwiSaver become vital. We discuss options that provide the same growth potential as KiwiSaver but with the liquidity you need to live your life on your terms.
Everything Connects
The Axico philosophy is built on the idea that your financial life isn’t fragmented. Your KiwiSaver growth influences your deposit timeline. Your deposit timeline influences your lending capacity. Your lending capacity influences your ability to protect your family.
When you align these pieces, you stop reacting to the world and start building it.
Conclusion: Clarity is the First Step
Not knowing where your KiwiSaver is, or what fund you are in, is a heavy mental load. Clarity is the antidote to that stress.
One conversation—one simple review—could change the trajectory of your financial future by hundreds of thousands of dollars. Not because of a magic trick, but because of deliberate, aligned strategy.
Are you ready to stop defaulting and start deciding? Let’s book a KiwiSaver Strategy Review.