Wednesday, July 18, 2007

Kiwisaver EPF CPF 401K or whatever.

Last night we filled up Kiwisaver application form for the children. We would direct debit our account $10 a month to contribute to their retirement account. That is probably the maximum we could set aside for the children before they start working and continue their own contribution themselves.
I have been searching for a Kiwisaver scheme that has no minimum (well maybe $1) contribution for the past few week. Some companies like Fisher Funds has minimum acceptable of $100 per month, while Gareth Morgan $50 per month. ASB has minimum $12.50 per week. So what I did was check these companies websites and email them asking what is their minimum contribution. Tower reps replied saying no minimum contribution.
Thats it, send me 7 application forms. No I would not put mine in Tower, because the returns is average, but for the kids' its okay because I can only contribute minimum amount for them anyway.
I join Fisher Funds, because theirs are the top rating fund management company as rated by MorningStar. Last year their Australia Funds returns 29.8%. Thats phenomenal.
Well I must print out their disclaimer; "Past returns is not an indication of future performance."

At first, i have thought of contributing 8%, but when I think about it, I cannot afford that much. Because I have to contribute for the children's account as well.

Why did I open Kiwisaver account for the children?
Well, to give them a head start.
Govt would give $1000 kickstart for every Kiwisaver account. That means the kids would be $1000 richer soon as their account opened.
Then after 5 years, if the Kiwisaver account holder want to buy their first home, Govt will give $5000 towards the deposit. So lets say when the kids are 21, and they want to buy their first home (by that time they would have a few thousands in their Kiwisaver account) they can withdraw their contribution, and the Govt give $5000 for house deposit. Thats a good deal!
That is also the primary reason I join the scheme.
If you are over 18, Govt will match your contribution up to $20 per week.
Damn the kids not qualified for that!
The beauty of it, the scheme is portable, so if you move to another country, you take transfer to another retirement scheme provider.

Here is the link to NZ Govt Kiwisaver website.

Reading the latest report, it seems the joining rate amongst Kiwis is about 35%. To me its no brainer way to get a bit richer.
When someone give you, "Here is $1000."
Would you say, "Well maybe I will take it next year." ?
A lot of people do just that.

The missing link here is 'active door to door' promotion of the scheme. None of the scheme provider send their sales people to factories and companies handing out forms. Employer dont get as much information and help either.
I think Govt dont have enough money to pay for their $1000 kickstart and $20 match up promises. So you would understand that Govt dont want the Kiwisaver take up rate too high.
Dont discount people's apathy, Kiwis would find any excuses under the sun.

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