Investing through market ups and downs

If you’re in the AMP KiwiSaver Scheme or New Zealand Retirement Trust (NZRT) and are worried about the recent market movements and what it means for your investments, read on.

Links to content:

Market ups and downs
Reducing investment risk
Investing in a down market
-  A plan you can stick to
- FAQs

Watch the video:


 Our Chief Executive Blair Vernon talks about market ups and downs.

  

Share markets have gotten off to a rocky start this year, with many across the globe experiencing ups and downs, which is not unusual after a period of consistent growth.

What goes down does come up


If you’re in the AMP KiwiSaver Scheme or NZRT, you might have seen your balance drop with the recent market movements, and we know sometimes that can be worrying.

But it’s important to remember that markets go through cycles, and ups and downs are a natural part of investing. What we know from experience is that down markets are followed by up markets.

We saw this in 2020 when global markets dropped because of the impacts of Covid-19 and in a matter of weeks the overall value* of the investments in our AMP Balanced Fund fell 19% (consistent with the performance of most KiwiSaver balanced funds in the market).

But our AMP Balanced Fund bounced back and recovered 26% by the end of the year (so improved 7% from before the market drop).

It’s also handy to put the recent market movements in context. Following a period of growth, the value of the investments in the same fund have dipped due to the recent market movements, but the overall value** is the same as it was in October last year.

The upside of down markets


When you put money into an investment, you’re buying things that have value like shares in a company.

When markets drop, you’re buying things at a lower price, and when they recover, those things are worth more, which should have a positive impact on your investment.

In other words, making regular contributions over time if you are able to, regardless of market conditions, is the best way to help grow your investment.

Variety is the spice of investment


One of the many benefits of being in the AMP KiwiSaver Scheme or NZRT is that your savings are typically invested in all sorts of assets, sectors and markets all around the world.

This is called diversification, which helps to protect your investment, as while the value of some assets might drop, the value of others may increase.

When a plan comes together


Based on the FMA’s 2021 KiwiSaver Annual Report, more than half of people in KiwiSaver are 40 years of age or younger. That means they have at least another 25 years until they reach the age for a retirement withdrawal.

What’s most important, whether you have two or 25 years to go, is that you have a plan that you can stick to, to help you achieve your goals, so you can enjoy the retirement you want.

If you’re worried or not sure what to do, or just want to check your AMP KiwiSaver Scheme or NZRT setup is right for you, we’re here to help. You can get in touch by calling 0800 267 5494 or email us at kiwisaver@amp.co.nz.

Important information

*The overall value of the investments is based on the unit price of the fund.
** Based on the unit price as at 1 February 2022.
While care has been taken to ensure that the information in this article is accurate, no entity or person gives any warranty of reliability or accuracy, or accepts any responsibility arising in any way including from any error or omission.
The information included in this article is of a general nature and does not constitute financial or other professional advice. Before taking any action, you should always seek financial advice or other professional advice relevant to your personal circumstances. For financial advice, we recommend you contact your Adviser. If you don’t have an Adviser, contact us on 0800 267 5494.
All forms of investment involve risk. None of AMP, The New Zealand Guardian Trust Company Limited or any other person or entity guarantees the performance of the AMP KiwiSaver Scheme and NZRT or any investment in the AMP KiwiSaver Scheme and NZRT (including the returns on that investment). Past performance is not indicative of future performance. Returns over different periods may differ.
AMP Wealth Management New Zealand Limited is the issuer and manager of the AMP KiwiSaver Scheme and New Zealand Retirement Trust. For a copy of the AMP KiwiSaver Scheme and New Zealand Retirement Trust Product Disclosure Statement and Fund Update Booklet, please visit amp.co.nz or contact Customer Services on 0800 267 5494.

FAQs

Why are sharemarkets/balances going down so much?

Right now, financial markets around the world are grappling with many issues – the largest being high inflation which is impacting prices everywhere. Rapidly rising food and energy costs are driving this.
Combined with a global pandemic and the ongoing war in Eastern Europe it is no surprise that this creates uncertainty. Markets do not generally like uncertainty.
Our investment team has just recorded a 2-minute video on recent market activity – we encourage you to view this: Markets in two minutes - June 2022 - YouTube We also write regular updates on our website: Market commentary | AMP New Zealand

I am worried about what I’m hearing on the news…

We don’t believe focusing on news or media stories about what markets have done is an effective way to make smart financial decisions. News and media are commonly sensationalised to make people take notice.
It is also backward looking. Investing or saving is like driving a car. You drive your car looking out the windscreen, with regular checks in your rear-view mirror. You don’t drive your car solely with your rear-view mirror. Focusing on media reports is like driving solely with the rear-view mirror…
Also, you usually only hear about markets or impacts on KiwiSaver in the media when there is bad news. It is unlikely the lead story on the news tonight will be that global markets are all up today.

What should I do?

If you are worried about how the market volatility and returns are impacting your investment or savings goals, then you should talk to a financial adviser before making any decisions. An adviser can help make sure you are in the right funds for your goals, plans and appetite for risk.
If you have the right settings for your goals and plans, then you should focus on the longer-term and let the markets do what markets do.