If you’ve been watching your investment or KiwiSaver balance and noticed it’s dipped recently, you’re not alone. Market ups and downs—also known as volatility—can feel unsettling, especially when the news is full of talk about inflation, interest rates, and global uncertainty.
So what’s actually going on? And what should you do (or not do) when markets get wobbly?
Volatility is a normal part of investing
It might come as a surprise, but market fluctuations are completely normal. Investment markets are influenced by a wide range of factors—economic information, government policy, global events, company performance, and even investor behaviour. These all interact to push prices up or down, sometimes in unpredictable ways.
While it can be nerve-wracking to see your balance drop, short-term volatility is to be expected. It’s not a sign that something is broken—it’s part of how markets work.
Keep your long-term goals in focus
When markets fall, it’s natural for some people to want to take action to avoid further losses. But trying to time the market—by pulling your money out or switching to a more conservative fund—can mean you miss out on the recovery when markets bounce back.
History has shown that markets generally do recover over time. If your investment horizon is long (for example, saving for retirement through KiwiSaver), it usually makes more sense to ride out the bumps than to jump ship when markets are falling. Short-term drops can feel big, but in the bigger picture, they’re often just a small dip on a long-term growth path.
Your fund choice can affect how much you feel the bumps
Not all funds respond the same way during market swings. Growth and aggressive funds tend to invest more heavily in shares, which means they will usually provide higher long-term returns—but with greater ups and downs along the way. Conservative and defensive funds are steadier, but their returns tend to be lower over time.
If you’re losing sleep over your investments or KiwiSaver, it could be a sign you’re in the wrong fund for your risk tolerance. Your fund should match both your comfort with risk and how long you plan to keep your money invested. That’s something an adviser can help you check.
Regular contributions can help smooth the journey
One of the most effective tools during periods of volatility is consistency. If you’re contributing to KiwiSaver or another investment fund regularly—say, through your pay or automatic transfers—you’re benefiting from something called dollar-cost averaging. This means you’re buying units at a range of prices, which helps average out the cost over time.
In practice, this means that even when markets dip, your regular contributions are buying more of the investment because it is at a lower price—essentially turning market downturns into an opportunity.
Feeling unsure? Let’s talk
It’s totally normal to feel concerned during volatile periods—especially when your hard-earned savings seem to be shrinking. But the key is to avoid knee-jerk decisions that could impact your long-term results.
If you’re unsure about your current fund, investment strategy, or just need some peace of mind, we’re here to help. A quick chat could give you the clarity and confidence to stick with your plan—or make a change, if it makes sense for your goals.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.