The Value of my Kiwisaver is Plummeting, What do I do?
The short answer is nothing. When the hysteria bus takes over you’ll start developing this compelling urge to do something. Change your growth fund to a conservative or jump ship to another company not as badly impacted. Though it may have given you a sudden feeling of relief your finances won’t be thanking you. In my line of work we call this crystallising your loss. Lets say you made an amazing 20% return from 2019 to 2020 then the market drops by 20% so you freak out and sell your assets to change the fund. What is your return now?
Despite what the latest journalist funded economist wants you to believe, it is nearly impossible to time the market, so in times like this, what matters isn’t the fluctuations in price, but instead, your risk tolerance, your time horizon for needing the money and making sure you don’t have all your eggs in one basket. By this I mean a diversified investment approach split across the four asset classes (cash, bonds, property and shares) which are the founding principles of why Kiwisaver exists and the very strategy we’ve adopted in our company for the last three decades.
This pandemic may be new but the markets reactions are not.