In March 2020, when KiwiSaver balances dropped as a result of the pandemic, there were reports that a large number of KiwiSaver investors switched funds out of anxiety they were losing a great deal of money.
Now that markets are yet again in a period of volatility, the FSC is trying to communicate to investors that the best course of action is to remain calm.
FSC CEO Richard Klipin was interviewed by RNZ:
"The best course of action is to stay steady, to stay patient because most of these shocks will wash out over a long period of time."
"If we knee-jerk our way through by switching and changing ... it's certainly going to have negative impact on our savings, our KiwiSaver balances and ultimately our frame of mind."
You can read the full article below:
Richard was also interviewed on Friday 1 March about the impact of Russia's invasion of Ukraine on wellbeing and on KiwiSaver balances.
"Any time you have big shocks in the marketplace, unexpected events, the whole game changes...
"Markets are emotional because humans are emotional... What often happens with investor behaviour is ... when a big shock happens and they see their prices go down they sell out, flee for the hills and go 'I don't want to lose money, I don't want to lose any more money."
"For seasoned investors ... the sensible advice is to hold the line."
"If you're making decisions week by week, day by day, minute by minute, you're going to cause yourself and your portfolio harm. So our guidance is ... hold the line. If you've invested for the right reasons, markets will bounce back."
"It will continue to go up and down, but I think any knee-jerk reactions end up causing you harm to your wealth, harm to your health and may scar you long-term as an investor."
Listen to the 1 March episode of Recap below. Richard is on at 6:26:
The FSC is also part of a cross-sector working group established by the Financial Markets Authority (FMA), which is working to align messaging about volatility to consumers across the industry. You can read more about the FMA's stance on market volatility here.
Our Money and You website has some more resources about investing, including an episode with the FMA's Investor Capability team about the 5 Ds of DIY Investing.