You might have heard of Simplicity, a brand new not-for-profit KiwiSaver scheme that’s shaking up the industry. There’s been a lot of positive buzz around it (it’s so hot right now!) I’ve been following it closely over the last few months and now they’re open for business!
I wrote a few months ago about how the fees most KiwiSaver schemes charge are an absolute scandal and how you need to be super aware of them when choosing your KiwiSaver provider.
I also said in that post that more needs to be done about KiwiSaver fees, but I definitely didn’t expect a great alternative to emerge so quickly! I’m incredibly excited about Simplicity.
Here’s why I love Simplicity and am pumped to make them my KiwiSaver provider. (Oh and by the way, these opinions are all my own and aren’t sponsored)
They charge low fees!
At just a flat $30 a year + 0.3% of what you invest, Simplicity’s fees are FAR lower than even the closest competitor. It might not sound like much, but small differences in fees can add up to thousands or even tens of thousands over your lifetime.
This graph above is to illustrate what an extra 1% per year in fees would cost you. It assumes you contribute $2,000 a year to your KiwiSaver and that you got returns of 6% before fees.
If you’d paid only 0.3% in fees you’d have around $300k after 40 years (pretty sweet)
If you’d paid 1.3% in fees, however, you’d only have $235k – that’s $65k less!
As they’ve written on their blog, if the average KiwiSaver fund earns 5.2% per year and charges fees of 1.3%, their fees are actually wiping out 25% of your returns.
Simplicity’s fees are incredibly low right now, but in the future I expect them to go even lower once heaps of people have signed up.
Simplicity is a not-for-profit and 15% of its fees go to charity
Awesome! I don’t know about you, but I’d prefer my KiwiSaver fees go to charity rather than lining the pockets of investment managers.
They invest in Vanguard index funds
Vanguard is a really reputable company that sells ETF’s.
As I’ve written about before, index funds are the best way for most regular people to invest. They’re also great for your KiwiSaver scheme! Index funds have lower fees, and lower fees = bigger returns for you.
It’s so easy to sign up
You just chuck your deets into an online form and your current provider will switch you over to Simplicity. I did this earlier today and it took me about 10 minutes (7 of which were spent trying to find my IRD number)
Even if you’re already happy with the returns your KiwiSaver scheme is getting, I do reckon it’s still a great idea to switch to Simplicity.
Don’t just take my word for it, though – check out their website and find out for yourself.
Hit me up with your thoughts on this new KiwiSaver scheme!
If you’re interested in learning more about passive investment providers in NZ, check out some of my articles below:
- My thoughts on the Sharesies Beta
- Dean from Smartshares answers your questions!
- I chat with Anthony from InvestNow
- Breaking news: Simplicity releases new Investment funds
- I compare the fees of Smartshares and Simplicity
- Smartshares compared to Simplicity: Part two
Or, If you want to learn more about general investment strategy, check out one of the articles below: