Managed Funds, KiwiSaver, or term deposits?
Your investment guide to exploring the key differences between Managed Funds, KiwiSaver and term deposits.
Managed Funds are a simple way to get started with investing. Once you've opened a Managed Funds account, you can make contributions that'll be pooled with other investors’ money to create greater buying power. This gives you access to investment opportunities you may not have as an individual investor. These pooled contributions are then invested by the fund manager, and you make gains and losses on your contribution depending on how the investments are performing.
A KiwiSaver Scheme is a type of managed fund scheme designed to help you save for retirement and has some extra rules and benefits to help you get there. There are some circumstances where you can withdraw your savings early from your KiwiSaver account, these include for your first home purchase or for serious illness.
A term deposit allows you to put a lump sum of money into an account to earn a fixed amount of interest over a fixed term. The length of the fixed term will typically range from one month to five years. During this time, you cannot deposit more money in the term deposit, nor can you access this money. You can only access the funds at the end of the term.
If you wish to access these funds early, you may be charged a penalty fee. Interest rates for term deposits are agreed between the borrower and the lender before the lump sum of money has been put into the account, confirming a fixed return over the agreed term.
A quick comparison of Managed Funds, KiwiSaver and term deposits
Eligibility criteria may apply
Eligibility criteria may apply
Eligibility criteria may apply
Early withdrawal fees may apply
Compare AMP Managed Funds, AMP KiwiSaver Scheme and term deposits
What is the purpose of these investment options?
AMP Managed Funds are an investment option with the flexibility to invest and withdraw when you need to. It can help you save for your short-, medium- and long-term goals whatever they may be.
The AMP KiwiSaver Scheme allows you to invest in a range of managed funds, with some extra rules and benefits established by the New Zealand Government. It is designed to help you save for your retirement however it can be used towards a deposit on the purchase of your first home.
Term deposits are an investment option that give you a fixed return for a fixed term of your choosing. Term deposits can help you to achieve your short, medium or long-term goals.
Who can open an investment account?
Individuals aged 18 or over, are living in (or normally living in) New Zealand and are either a New Zealand citizen or entitled to live in New Zealand permanently are eligible to open an AMP Managed Funds account. Currently, AMP Managed Funds is only open to individual investors, meaning you cannot open an account with your partner, child or family trust.
Individuals aged 18 or over, are living in (or normally living in) New Zealand and are either a New Zealand citizen or entitled to live in New Zealand permanently are eligible to open an AMP KiwiSaver Scheme account. It is possible for individuals under 18 years old to open an account provided certain requirements are met.
Individuals can invest in a term deposit with their existing bank provider or open an account with another term deposit provider, providing they fit the eligibility criteria associated with opening an account.
How much to I need to invest to open an account?
There is no minimum investment requirement when opening an AMP Managed Funds account. You choose the amount you invest, how often you invest and which funds you invest in.
As an employee, you contribute at least 3% of your salary or wages, and up to 10% if you choose, into the AMP KiwiSaver Scheme. If you're self-employed, you choose how much you contribute. You can also make voluntary contributions into your AMP KiwiSaver Scheme account whenever you wish.
With term deposits, minimum investment requirements can vary from provider to provider however, usually a minimum of at least $5,000 is required to open an account although some providers allow you to deposit lesser amounts.
When can I make withdrawals from my account?
There is no lock-in period when you invest in AMP Managed Funds. You control which funds you invest in and when you make withdrawals.
Your AMP KiwiSaver Scheme account balance is generally locked in until you’re 65-years-old unless making an eligible withdrawal (for example, a first home withdrawal or for serious illness).
When investing in a term deposit you're locked in according to the fixed term you have chosen, subject to early withdrawal charges.
What fees will I pay on my investment?
With AMP Managed Funds you'll pay a low fee of 0.8% per year* and that’s it.
With AMP KiwiSaver Scheme you'll pay 0.79%¹ per year on our AMP-branded funds. A fixed fee of $1.95 per month also applies.
Usually there are no fees to open a term deposit and no monthly account maintenance or management fees. However, if you wish to withdraw your funds early you may be charged an early withdrawal fee.
Will I pay tax on my investment?
When investing in AMP Managed Funds or the AMP KiwiSaver Scheme, a Prescribed Investor Rate (PIR) is used to calculate the tax you will pay on your investment (called Portfolio Investment Entity (PIE) tax). The current tax rates are 10.5%, 17.5% and 28%. Find out how to determine your PIR.
You will pay Resident Withdrawal Tax (RWT) on your term deposit. The current RWT rates are 10.5%, 17.5%, 30%, 33% and 39%. You can find out how to determine your RWT rate on the Inland Revenue website. It may also be possible to invest in a Term PIE fund and benefit from the tax advantages of the PIE regime.
Are my returns guaranteed when I invest?
The returns from investing in AMP Managed Funds and AMP KiwiSaver Scheme are not guaranteed. Account balances will move up and down depending on the performance of the funds that you are invested in. Your return can vary from year to year, and there is also the risk you could receive less back than what you originally invested.
Term deposit returns are certain, and the return will depend on the fixed interest rate you have chosen when investing.
Are my investments diversified?
All three funds offered in AMP Managed Funds are diversified funds. This means they are invested in all sorts of assets available around the world.
Most funds offered in the AMP KiwiSaver Scheme are diversified funds meaning they are invested in all sorts of assets available around the world. You can also choose to invest in specific sector funds. In the AMP KiwiSaver Scheme, you can diversify even more by investing in up to seven funds at a time.
Term deposits are by their nature not a diversified investment. In return for depositing your money you get a guaranteed rate of interest for the agreed term.
Are there employer and goverment contributions?
There are no employer or government contributions made when investing in AMP Managed Funds.
As a KiwiSaver member, if you are between 18 and 65 years old and are contributing at least 3% of your gross salary or wages your employer must also contribute at least 3%. If you are eligible, you will also receive up to $521.43 per year from the government.
When investing in a term deposit, there are no employer or government contributions made.
Looking to invest?
At AMP, we offer a range of investment options that may suit you. Because everyone's needs are different, you should always seek financial advice or other professional advice relevant to your personal financial situation. For financial advice, we recommend you contact your Adviser. If you don’t have an Adviser, contact us on 0800 267 5494 or find an adviser online.
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* The 0.80% fee is the estimated total annual fund charge for the AMP Growth Managed Fund and the AMP Balanced Managed Fund. The estimated total annual fund charge for the AMP Conservative Managed Fund is 0.79% per year. The estimated total annual fund charges noted above are expressed as a percentage of the net asset value. They comprise a fixed management fee (0.74%) and the estimated costs and expenses charged by the underlying funds .