Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Surviving A Bear Attack: Here’s How To Prepare For A Market Downturn

News of the coronavirus has dominated media at home and overseas since it broke a few weeks ago. On top of the human cost is the economic cost and questions around what an event like this means for the share market and investors.

If a significant crash happens due to the virus, where would that leave most Kiwis?

There is one thing all New Zealanders with KiwiSaver investments can do in advance… prepare by checking they are in the right fund.

Joe Bishop, Kiwi Wealth’s General Manager of Customer, Product and Innovation, says the coronavirus and its impact will naturally concern some KiwiSaver members.

“There’s been a real dip in the markets and it’s quite prominent on the news. There’s been quite a spike in the number of people looking to understand what it means for their investment.

“KiwiSaver really is about taking a long-term view to investing and has the potential to make a huge lifestyle difference after 65 if it’s managed well, based on your comfort level of risk.

“The main message is to 1) check that you are in the right fund now and 2) hang in there.”

Four key steps to help prepare for a market downturn:

  1. Ensure from the start that you are in a fund that suits your investment timeframe and the risk you are willing and able to take given your personal circumstances.
  2. Don’t panic and immediately adjust your risk when markets get rocky

Switching funds as soon as the markets turn could be an instinctive temptation, but it could cost you in the long run.

A 25-year-old earning $70k per year that contributes 3% of salary along with their employer could expect a balance around $730,000 at age 65, in a growth fund. With a conservative fund they are likely to end up with a balance around $495,000 at 65.

That’s a potential loss of $235,000, or 32% loss in gains. If you are jittery, get financial advice before doing anything.

  1. Don’t be unnerved by a dip in your balance.

KiwiSaver is for the long-haul. Ups and downs are normal for share markets – it’s the price that has been paid for potentially superior returns compared to less variable investments.

  1. Don’t do anything else.

Keep on putting money away and continue contributing to your KiwiSaver investment in a fund that matches your investment timeframe and level of risk. When the market does start falling, your current investments may temporarily have dipped in value, but most things you buy now are cheaper too

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

NIWA: Scientists Say Methane Emitted By Humans ‘vastly Underestimated’

NIWA researchers have helped unlock information trapped in ancient air samples from Greenland and Antarctica that shows the amount of methane humans are emitting into the atmosphere from fossil fuels has been vastly underestimated... More>>

ALSO:

SMC Expert Reaction: Record Dry Spells And Effects On Forests

With no rain forecast before Sunday, Auckland is about to break a record for the city's longest dry spell. Niwa says Auckland is likely to hit 40 consecutive days without rain this weekend . The upper North Island is seeing severe meterological ... More>>

ALSO:

Reserve Bank: Official Cash Rate Remains At 1.0 Percent

The Monetary Policy Committee has decided to keep the Official Cash Rate (OCR) at 1.0 percent. Employment is at or slightly above its maximum sustainable level while consumer price inflation is close to the 2 percent mid-point of our target range. ... More>>

ALSO:



Science Media Centre: Novel Coronavirus Detected In China – Expert Reaction

The virus was detected after more than 40 people were hospitalised with pneumonia in Wuhan City, China and the outbreak traced to a large animal and seafood market. The Centers for Disease Control and Prevention reports that person-to-person transmission ... More>>

ALSO:

Science Media Centre: Flooding could release toxic gas – Expert Reaction

A chemical substance known as ouvea premix stored at an old paper mill in Mataura could release toxic ammonia gas if it comes in contact with water.More>>

ALSO: