Why KiwiSaver is the best investment in New Zealand

KiwiSaver is quite possible the best investment in New Zealand right now. Even better, it is available to all New Zealanders.

For those that don’t know, KiwiSaver is New Zealand’s retirement scheme. Money from your wages, your employer, and the government comes together to make you rich. Yes, you will literally be given free money! In fact your employee and the government will match up to 150% of what you contribute to your own retirement savings.

Let me explain how.

How it Works (and how to get free money)

If you are enrolled in KiwiSaver and work as an employee, then your KiwiSaver contributions will be automatically withdrawn at either 3, 4, or 8 percent of your pay.

If you earn $13,000 a year exactly with 8% deductions you will contribute $1,040 to your KiwiSaver. If you earn less than that, maybe as a student or part-time worker, you will need to make a lump-sum payment to top up the amount to $1042.

If you earn $26,000 a year, then you only need to contribute 4% to reach $1040 invested.

Lastly, if you earn $35,000 a year, then only 3% contribution rate is required.

I used to contribute 8% because psychologically it was easier to save BEFORE getting paid into my bank account.

So why $1042 contributions a year?

Remember how I said the government is literally chucking free money at you for doing the right thing? Here’s how it works.

The government will give you lump sum payment of $521.43 each year if you contribute at least $1042 that year. So you know I’m not making this up, here’s the quote from the official KiwiSaver website:

To help you save, the Government will make an annual [untaxed!] contribution towards your KiwiSaver account as long as you are a contributing member aged 18 or over

If you are over 18, contribute at least $1042 a year, you will get a free $521.43 bonus for doing the right thing. That is a 50% return straight away!

You can get this government contribution even if you are self-employed. Just make sure you make a manual contribution to your KiwiSaver.

But wait there’s more (free money)!

It gets even better.

If you’re a KiwiSaver member making contributions from your pay, your employer also has to put money in.

Remember how your wages are being automatically deducted from your employer each pay cycle. Well, your employer must match your first 3%! That’s a 100% return on your investment! (its actually less as the government now taxes their contributions)

If you chose not to enroll in KiwiSaver, they do not have to pay this money to you (and usually won’t).

But, but, I need this money now to save for a house deposit

Good news, ALL of the free money in your KiwiSaver account can be withdrawn to buy your first home. If that isn’t good enough, there is also extra money available for first home buyers (some conditions do apply).


Assuming an income of $13,000 a year with 8% contributions, your KiwiSaver account will have received $2605(minus employer tax)  in contributions. Of this you only contributed 40%! In addition, you have also saved 20% of your annual income!

kiwisaver investment contributions
This graph shows where your contributions will have come from over 10 years based on an annual personal contribution of $1042. This does not show any increase in value of your fund.


I hope by now you are super excited about how good KiwiSaver is!

  1. Best investment for your initial 3% maybe. After that, just put it elsewhere with a fraction of the fees.

    1. Absolutely agree. Although some people struggle to not spend their savings so it does have the benefit of being untouchable.

    2. Simplicity’s fees are 0.31%. If you were going to withdraw the cash for a house deposit, I’d go the full 8%.

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