NZ Herald 19 July 2025

AYour Dad has come up with the perfect way to invest in rental property. Investing is about risk and return, and he greatly reduces the risk of property investment in three ways:

• He takes a really long-term view.
• He’s not counting on selling at a gain to make the whole thing worth doing.
• It seems he doesn’t put himself in a position in which he might be forced to sell — perhaps at a loss. That can happen when rental income doesn’t cover expenses, and the landlord loses a job or other source of income and can’t make mortgage payments. And sadly, that tends to be when house prices are stagnant or falling. The dream of riches turns into a nightmare.

In retirement, if your father finds that worrying about tenants and maintenance is a drag, or if he would like to free up more money to spend on gallivanting around the globe, he always has the option of selling a property. Somehow I’m not picturing your Dad as a gallivanter, though!

AInvesting in a property fund can be another good way to get into property.

There are several upsides. You usually invest in commercial property, which differs more from your own home than investing in a house for rent. And the fund usually invests in a range of properties, not just one, so problems in one location might be offset by success elsewhere. Also, you don’t have to run the investment. You just put in your money.

On the downside, circumstances might change, and it can become hard to get your money back out. Or, if you do sell, you may get a low price.

It seems you’ve hit the downside. “In late 2022, the economic environment shifted rapidly, with inflation, interest rates and market volatility all rising sharply,” says Oyster Property Group. “At the same time, due to these market conditions, the Fund experienced a significant reduction of new investment equity and a surge in redemption requests.

“To protect the long-term value of the Fund for all investors, the redemption facility was suspended. This provision is built into the Fund’s Trust Deed to support it during volatile economic periods, such as this one, and it was a measured and necessary step to preserve its financial resilience.”

While investors can’t get their money out directly from Oyster, the company says they can withdraw through online platform Syndex — although, given market conditions, I doubt if you would get a great price.

Oyster says it warned investors a suspension might happen in its product disclosure statement (PDS), which is given to all potential investors, and added that it encouraged investors to seek independent financial advice.

On your question — is there a time limit on a suspension? — Oyster replied, “There’s no fixed time limit — however, any suspension must be justifiable and in the best interests of all investors.” It adds that decisions on redemptions are overseen by the fund’s independent supervisor.

So, is the suspension likely to be lifted by the end of this year?

“Oyster is reviewing the Fund’s position on an ongoing basis with focus on opening the Fund to new equity and reinstating a redemption facility as soon as it is prudent to do so. As economic conditions improve and interest rate reductions begin to take effect, Oyster will provide investors with a clear timeline for these steps,” the company says.

Hang in there!

Meanwhile, other readers might note that any property fund investment should be with money you are happy to tie up for some years.

AThanks for a good idea.

AYou’re missing a few details. KiwiSaver is indeed taxed, but your provider takes care of that, subtracting the tax from your balance. And the returns you see on Sorted’s KiwiSaver tools are after tax.

So when you compare term deposit and KiwiSaver returns, you’re right to look at the deposit returns after tax too.

Also, the risk level of your KiwiSaver fund is relevant. If you’re in a low-risk fund, it’s a good place to park money you might want to withdraw at any time — given you’re over 65.

On the other hand, if you’re in a balanced, growth or aggressive fund, your balance will sometimes fall a fair way. While you will probably get more long-term growth, these funds are not suitable for money you might withdraw within the next two or three years.

It can work well to be in several funds at two or three risk levels, and spread your money according to your spending plans.

AThat’s great that you have made those moves. Your fee savings, plus the compounding returns on that extra money, will add up to some lovely retirement treats! You will almost certainly also have boosted your savings by moving to a higher-risk fund.

However, given your “fiscal conservatism”, I hope you’re ready to cruise through the inevitable ups and downs of your balance in a growth fund.

Also, as noted above, growth funds are best for money you don’t plan to spend for ten or more years. So you might want to move the portion you’re likely to spend in less than a decade back to a balanced fund with the same provider. And then move it again to a low-risk fund when you’re two or three years away from spending it.

But if you expect some of the money to stay in KiwiSaver for more than ten years, by all means leave it in growth. And be brave about downturns! Two further notes:

• While your fee totals until retirement are impressive, readers who are younger or have larger KiwiSaver balances will find their fee totals considerably larger. It’s really worth using the Fund Finder to check.
• You mention the helpful email from sorted.org.nz. I asked Tom Hartmann, personal finance lead at Te Ara Ahunga Ora, the Retirement Commission, how to get those emails.

  “We do have an entire email programme, primarily to those who have signed up for an account on Sorted, or otherwise have told us they’d like us to stay in touch,” he says. You can specify how you would like to be reached, and opt out at any time.

AA valid question. Fortunately, the work is done for you.

But first, some background. Most KiwiSaver fees are percentages. But some providers also charge membership or administration fees, which are a fixed amount regardless of whether your balance is $10 or $10 million.

“There’s been a trend away from membership or administration fees in recent years,” says Hartmann. “That said, about a third of KiwiSaver providers have let us know some form of flat fee that they charge.”

The effect of these fees will vary widely, depending on how much you have in your account. If, for example, your balance is $100, a $36 a year membership fee will have huge impact. But if your balance is $100,000 or more, it won’t make much difference.

According to information given to sorted.org.nz about these fees:

• Pathfinder charges $2.25 a month.
• Koura, Nikko AM, Pathfinder, Quaystreet and SuperLife charge $2.50 a month or $30 a year — which amounts to the same charge.
• Aurora, Booster, Generate, Koura and Summer charge $3 a month or $36 a year.
• SuperEasy charges $54 a year.
• Quaystreet adds that there’s no membership fee for under 18s, but it also charges scheme expenses estimated at $5 a year.

All of these are in addition to percentage fees at varying levels.

How can you apply all this to your own situation?

When you use Sorted’s KiwiSaver Fund Finder tool, you fill in your age, account balance and other details. The tool then projects how much you might end up paying in fees by the time you’re 65, in each of the funds at your risk level. This calculation — mentioned in the Q&A above — takes into account both flat and percentage fees, says Hartmann.

You may also want to use Sorted’s other KiwiSaver tool, Smart Investor, to get more info about each fund. But this time you don’t enter your details, so the fee calculation can’t take into account your balance and so on. Instead, the fees “are based on what you would pay over a year if you had $30,000 in this fund. This includes both flat fees for membership and percentage fees.”

If your balance is much lower or higher than $30,000, you’ll get a more accurate fee comparison in the Fund Finder.

My recommendation: First use the KiwiSaver Fund Finder, and focus on several providers charging the lowest fees. By clicking on each fund’s name, you go through to the Smart Investor page for that fund, to learn about the asset mix, what the provider says about the fund and so on.

You can also compare each fund’s past returns with other funds at that risk level. But don’t take much notice of this — other than to rule out really bad performers. High returns in the past are no indicator of high returns in the future.

As Hartmann says, Total fees “can add up to tens of thousands, so it’s really important to keep an eye on fees.”