KiwiSaver now holds over $128 billion, and with cryptocurrency’s growing popularity, some are asking: should your KiwiSaver have crypto in it? We explore what crypto really is today, whether it belongs in your retirement fund, and the risks Kiwi investors need to weigh up before making the leap.
What Is Cryptocurrency and Has It Delivered?
When cryptocurrency first emerged, it promised to be a decentralised currency that would replace traditional money. Over a decade later, widespread adoption for everyday transactions hasn’t happened – you’re far more likely to pay for dinner with dollars than Bitcoin. Instead, crypto has become a speculative investment, with its value often driven by hype and sentiment rather than tangible outputs.
The challenge for investors is understanding its underlying value. Shares represent companies producing goods or services for profit, and property can deliver rental income and capital growth. By contrast, crypto offers no physical use or income stream – and while it has seen huge gains, its volatility is extreme.
Crypto’s Place in KiwiSaver Funds
Despite the risks, some KiwiSaver providers have started incorporating cryptocurrency into their funds. For example, certain funds cap crypto exposure at 10%, allowing members to gain some access without overloading on volatility.
However, KiwiSaver is one of the most important financial tools for retirement planning, with over 3.3 million members and an average balance of $33,000. The big question is whether such a volatile asset class should be part of something so critical to New Zealanders’ long-term security.
Balancing Freedom and Protection
Supporters of including cryptocurrency in KiwiSaver argue that it should be treated like any other asset class – investors should have the freedom to choose, as long as it’s only a portion of their portfolio. Critics worry that those unfamiliar with the risks could overcommit, chasing returns without understanding the potential downsides. This is especially concerning for older investors who may need access to their KiwiSaver funds sooner and can’t afford large losses.
Key Takeaways:
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Cryptocurrency was designed as a decentralised currency but is now largely a speculative investment.
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Some KiwiSaver providers include crypto exposure, often capped to limit risk.
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KiwiSaver is vital for retirement planning, making asset choice critical.
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Volatility is a major consideration – crypto can swing dramatically in value.
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Freedom to invest should be balanced with protections for inexperienced investors.
Next steps:
KiwiSaver is a cornerstone of your retirement plan – talk to a Lighthouse Financial adviser to ensure your investment choices match your goals and risk profile.
If you’d like to learn more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
