The investment sidecar – why every KiwiSaver member needs one

David Boyle

When I think of a sidecar I automatically picture a speedway motorcycle tearing around a racetrack with some poor soul hanging on for grim death attached to a pocket rocket. They are there to balance the rider and keep them on track so they don't career off into the crash barrier.

When I think about the investment world the analogies are not too dissimilar for your personal financial wellbeing especially when you decide to take a more active interest in your investments. A “sidecar” investment alongside your KiwiSaver account will provide you with more stability and help offset any bumps along life’s highway. More to the point you should be in a far better position financially as well. The key benefit is that you will have more flexibility but more on this later.

I first came across the “sidecar” idea when I was at the Commission for Financial Capability (CFFC). In 2018 at our Summit on financial capability I proposed the idea of developing a savings sidecar/emergency fund to be linked to investors’ KiwiSaver accounts.

The theory being before New Zealanders invested long-term, via KiwiSaver, they could use the central savings mechanism, via their employer and Inland Revenue, to have their contributions going into a rainy-day savings account.