A Richer You by Mary Holm

Author:Mary Holm
Language: eng
Format: epub
Publisher: HarperCollins
Published: 2021-01-19T00:00:00+00:00

WAITING FOR A FALL . . .

This was in April 2019 – almost a year before the Covid-19 market plunge.

Q Classic question, probably one you’ve seen before. I’m keen to switch from a balanced to a growth fund. I’m 42. If the share market clearly dropped, would it (likely) be advantageous to choose then as your moment to make that switch?

A Your plan would certainly beat doing the opposite – reducing your risk after the market has fallen – which is what many people do. It’s better to buy when something is cheap.

But what if you miss out on some great gains in the meantime? And would you have the nerve to switch right after a big drop? How would you know the market wasn’t going to plunge further? Nobody can be sure when prices have hit rock bottom.

It’s far better to move your money when it suits you – perhaps because you’ve realised that you have lots of years to go before retirement and your savings will almost certainly grow faster in a growth fund despite the ups and downs.

If you’re worried about moving all your money at what turns out, in retrospect, to be a bad time, you could move a third now, a third in three months, and a third in six months. Once you’ve set up a plan like that, stick to it, regardless of what the market is up to.

I’m not sure if you’re in KiwiSaver, but even if you are, you are allowed to have your savings spread across more than one fund with the same provider.

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