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[The Wrap] Millennial investors, KiwiSaver and property investment

It was a surprise to see the Retirement Commissioner drop a press release suggesting KiwiSaver should be able to be used to buy investment property.

Saturday, October 19th 2019, 9:00AM

by Philip Macalister

My first reaction was this is stupid. KiwiSaver is meant to be a locked-in scheme for people’s retirement.

But with a little more thought I’ve come around to thinking it’s not such a dumb idea.

A key part of my argument is that millennials have a very different approach to investing. (You’ll read more about this in our magazines, but one of the takeouts is that advisers wanting to work with this demographic will need to revisit their advice models.)

The story I use to illustrate this was a conversation with a millennial at a property conference. She said to me; “We’re different to your generation”.

“We don’t want to work our whole lives.”

Rather they want to invest and provide income streams so they can have the lifestyle they desire.

It’s not uncommon to hear a millennial saying they would rather buy an investment property before a place of their own to live in.

The other key strand to my argument is that residential property investing has proved to be a successful strategy for New Zealanders to create wealth and save. Tens of thousands of people have managed to provide for their retirement by investing in property rather than shares, bonds and cash.

Residential property is a valid asset class, and by and large it can’t be accessed through retail products like managed funds. Why exclude if from KiwiSaver.

I’ve always struggled with the idea that KiwiSaver can be used for a first home purchase as that seemed to be outside what the scheme was intended to do.

However, this has become a key factor in helping people get on the property ladder and increasing their wealth.

With a good set of rules around it KiwiSaver should be allowed for property investment.

Tags: KiwiSaver millennial investors property investment retirement The Wrap

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