Boxing Day spree would be worth millions to KiwiSaver

Boxing Day spree would be worth millions to KiwiSaver accounts and charities.

Give and save before you shop.

That’s the message from New Zealand’s newest KiwiSaver provider, which is asking all Kiwis to think twice about the hundreds of millions of dollars that will be spent across the country this Boxing Day.

According to Paymark data released last month, New Zealanders spent $238 million on Black Friday this year, and are anticipated to spend even more on December 26th during the legendary Boxing Day sales.

JUNO KiwiSaver Scheme’s Head of Investment, Paul Gregory, says the JUNO team wants New Zealanders to be mindful of their spending this Boxing Day, and check in with their favourite charity or jump online and check their KiwiSaver balances before hitting the mall.

“It’s a great day, once the excesses of Christmas Day are over, to consider those three ‘buckets’ we often hear about – spend, save and give. Retailers trumpeting big Christmas sales can easily take care of ‘spend’, but why not also think about often under-funded charity work, and your KiwiSaver balance, rather than concentrating solely on what’s in the sales?

“If this year’s Boxing Day spend is even slightly higher than the $238 million spent during the Black Friday extravaganza, that equates to $100 spent across the two shopping events by every man, woman and child in the country,”[1] Paul says.

“While $100 might not sound a lot at an individual level, if even a portion of it were to be invested into a KiwiSaver account or donated to a charity, instead of spent on goods and services, the potential returns are really strong – from both a social good, and an investment point of view.”

For example, $100 for each of the 2.9 million KiwiSaver members and the 360,000 others on a contribution holiday, or who have opted out of KiwiSaver entirely[2], is $327 million. “Some of that could be invested in retirement or a first home, or it could support a number of charities doing vital work,” explains Paul.

“Let’s further imagine that a third of that $327 million – so $109 million – is invested in KiwiSaver on Boxing Day this year and, over the next five years, gets the average annual return for a KiwiSaver Balanced Fund of 7.55% (after fees and tax) [3]. By Boxing Day 2023 the $109 million could have grown to $158 million – that’s $50 million more in returns. On a smaller scale: if you don’t spend $1,200 on a flat-screen TV and invest it in your future instead, a 7.55% annual return would grow it to $1,726 by 2023[4].”

The JUNO KiwiSaver Scheme launched less than five months ago, and already has over 1,330 members due to its low-fee, and in some cases zero-fee, model. Kids under 18 and those with balances under $5,000 pay nothing at all in fees, while all others pay just one, low, fixed monthly fee – like Netflix or Spotify.

The JUNO KiwiSaver Scheme also has a strong focus on helping Kiwis make good investment and broader financial decisions, with a number of financial tools and a rich selection of resources on its website, www.junokiwisaver.co.nz. The scheme recently won a national award for its plain English Your Guide to KiwiSaver, available online here.

Paul says JUNO would like to see more Kiwis considering their financial future – and making sure they are as prepared as possible for their first home, or retirement.

“The data shows 360,000 New Zealanders aren’t in KiwiSaver,” continues Paul. “We know there are various reasons for this, such as self-employment, people taking a break to raise children, or just that contributing to KiwiSaver isn’t affordable.

“But even small contributions get you on the road to forming good investment habits and means the Government will contribute alongside you. Just over $20 a week means you will get the maximum annual Government contribution of $521.43.”

He said the JUNO team understood that fees could also dissuade Kiwis from KiwiSaver, if they could only afford a small amount. “KiwiSaver members should definitely check what they’re paying in fees – the less you pay out, the more of your balance stays in to benefit from any returns.”

“That’s why the JUNO KiwiSaver Scheme is free for balances under $5,000 and charges simple, transparent, low fees for everyone else,” concludes Paul.

[1] New Zealand had 4.9 million resident population at September 2018, https://www.stats.govt.nz/indicators/population-of-nz
2 KiwiSaver statistics from the Inland Revenue Department https://www.kiwisaver.govt.nz/statistics/monthly/
3 Using data from KiwiSaver disclosures as at September 2018, collated on Sorted’s Fund Finder tool https://fundfinder.sorted.org.nz/funds/balanced/returns/
4 $1,200 attracting the 7.55% annual net return (from Sorted’s Fund Finder) for five years

ENDS

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