There seems to be an awful lot of houses for sale at the moment. On a break in the Coromandel, even my 6 year-old daughter noticed how many, compared to when we were there last year.
It serves to remind us that houses aren't always "liquid". When you need to sell your house, there needs to be people around who want to buy it. If you need the proceeds urgently, you might find yourself making compromises. That's another financial hazard. Investing money in something that you can't have access to when you need it.
Long-term investments like property tend to deliver over time and KiwiSaver is certainly similar in that respect. However, I think they are different enough to treat differently. Know what I mean? No? OK, I will put it another way then.
Once you get to a time when you are entitled to take your KiwiSaver benefit, you are not relying on the market to be able to cash it in. It's yours. It's there. If it's not enough, you can leave it in for a little longer or pay some extra money in.
Most of us are paying into a mortgage and we do that because the long-term promise is that we will make a good return and we need to pay for the place we live in, too. That's already a long-term, volatile and high risk investment. We sort of know how that works and we have got used to it.
What if your KiwiSaver provider said that you couldn't have your money at retirement? And you had to wait until they could find a "buyer"? You'd be outraged. And that's even before we talk about the actual investment return.
Think about your mortgage and perhaps balance that long-term investment with your other long-term investment, KiwiSaver. KiwiSaver incentives already give a great return before the money starts to be invested. If you are relying on KiwiSaver for a good retirement, going high-risk, high volatility isn't always the answer.
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