A recent ASB survey showed only 22 percent of respondents said they have a high understanding of KiwiSaver.
And knowledge of various investment types was also a cause for concern, investment author and columnist says.
Respondents were asked which type of savings or investment gives the best return.
The answers were personal homes (20%) rental properties (17%) term deposits (14%) KiwiSaver (11%) and shares (7%).
Shockingly, Mary says, term deposits scored higher than KiwiSaver
“I worry that people are thinking Kiwi Saver doesn’t have the best returns”
The highest scores were for personal homes and rental properties.
“All you get on a personal home is the gain when you sell it and you don’t get rent or dividends or interest you get.
“On the other hand you do get what the economists call imputed rent, basically free accommodation in your house.”
Rental properties could do well too, she says.
“In recent years they’ve had fantastic returns, they’ve had the rent minus expenses and very good capital gains.
“Whether that continues given, that house prices are slowing down around the country, is debateable - it comes and goes.”
Most worrying, she says, is the 14 percent of people who thought term deposits would give a better return than KiwiSaver.
“They [term deposits] are a low risk, low return investment. So they are good investments, but they are not high return investments.”
Before KiwiSaver the nearest thing to it was a managed fund, which would often perform as well as rental property, she says.
Now KiwiSaver with its incentives of $1000 kick start, tax credits and employer contribution make it the most attractive investment option for most employed people, she says.
“It really boosts KiwiSaver to the point where it’s quite hard to come up with a scenario where you’re going to do better than it.
“For most employees their own money is getting doubled, or more than doubled, by employer contributions and the tax credit coming in.”
If you’re thinking of joining KiwiSaver Mary recommends going here to compare funds.
Also in this podcast Mary discusses total remuneration with remuneration expert Geoff Summers.
Listen back to all of Mary Holm’s podcasts here.