How to manage your KiwiSaver in times of global conflict, market volatility

OPINION: It's tempting in times like these to panic and withdraw KiwiSaver and other investments, but Frances Cook believes it's best to sit tight and wait for the 'anxiety premium'.

By the time you read this, the refresh button on my browser has likely been hit more times than I’d care to admit.

Nothing like a doomscroll while the world is falling apart. Again.

With drone strikes in the Middle East and headlines dominated by the Strait of Hormuz, the first concern is of course the human cost at the centre of the conflict.

But there’s a very real secondary concern when the financial world becomes once again rocky, and the average person is rightly wondering if their safety net is about to be pulled out from under them.

New Zealand may be far from the main conflict, but the financial ripples are very real.

Petrol and energy prices are already up, global transport is choked which will add to the increased cost of living, and KiwiSaver and investment balances have taken a tumble as the sharemarket dips.

At times like this, the monkey brain starts to itch. It wants to do something.

To panic-sell, cash out of growth funds, or hide under our money under the mattress until the news cycle calms down.

But before you scrub your KiwiSaver strategy raw, we need to take a breath. In the world of wealth building, your long-term plan is a lot like a skincare routine: simple is usually better, and consistency is the only "miracle" ingredient that actually works.

If you have a KiwiSaver, you’re an investor.

And if it’s in a balanced, growth, or aggressive account, almost certainly some of it is in the sharemarket. That’s because the sharemarket is a brilliant way to get more money back, in the long-term.

But an important thing to understand about this bargain is that the sharemarket doesn't give out free money.

You aren’t seeing long-term average returns of 7–10% just because you’re a lovely person. You’re being paid a premium for sitting through the uncertainty that others can’t stomach.

Think of it as an anxiety premium. You are literally being compensated for the fact that every few years, the world gets loud and scary, and you have to sit there and do... nothing.

Not to make light of a very serious situation, but long-term investments are a bit like a good skincare routine.

Simple is often better. And better still, a simple strategy that you can turn into a routine that works.

A cleanser, some SPF, a reliable moisturiser, and then stick with it every day.

The magic isn’t in one super-expensive “miracle” serum you used once three years ago. The magic is in the consistency. The repeated actions that give results over a decade.

You see a headline, and feel the urge to change something with your money.

It’s the same instinct that sees a pimple pop up, you can’t stop yourself attacking it in the mirror, and then you end up with a bleeding crater in the middle of your face.

Oh yeah, that’s way better.

Or, leave a breakout alone and it will eventually sort itself out.

The market is a giant, global machine that is constantly trying to “price in” the future.

By the time you read a headline about oil prices, the professional traders have already made their moves, and the sharemarket price has changed, and settled. The shock is already reflected in the price.

So if you’re wondering whether to make a panicked change to your KiwiSaver… by the time you’re considering it, it’s almost certainly already too late.

The professionals move within minutes. We normal people, who have to get through daily life, and go to work, probably hear about the jitters after several hours or even days.

You can’t avoid the bad impacts by then, it’s already happened.

Besides, history shows us that while these moments feel unique and terrifying, the market is remarkably resilient. And that’s not because the world is a perfect place, it’s because businesses are adaptive.

If shipping routes get blocked, they find new ones. If energy costs spike, they innovate.

As a KiwiSaver investor, you are backing that human ability to problem-solve. It might not be tomorrow, or next week, or next month. But that money is designed to be there long-term, which in the investing world is five years or more.

Yes, problems will be solved in that time.

There is a massive difference between being a concerned citizen and a panicked trader. You can be the first, without falling into the trap of the second.

You can (and should) care about the world. You can read the news, support humanitarian efforts, and hope for a quick resolution to conflict.

But you don’t have to let that concern ruin your financial future.

Right now, I check in on the headlines in the morning, and the evening. And that’s as someone whose job it is to stay up to date.

I am consciously stopping myself from doomscrolling, and I’ve turned off push alerts from news apps. Living in a state of adrenaline fuelled anxiety doesn’t do anything except push me to make silly decisions.

So much of being ‘good with money’ is actually about making a long-term plan, then sticking with it, whatever happens.

It’s not being lazy, it’s actually having the discipline to stick to what you know, even when the emotions of the world around you are making you jittery.

KiwiSaver is built on a fund system, which means most of them are already invested in hundreds of different companies, around the world, and can withstand shocks exactly like this one.

When do you change? When your life changes, not the headlines. If your financial goals have changed, such as you’re hoping to buy a house soon. Or you’ve had a major life change, like welcoming a baby, or changing a job.

Maybe your personal timeline has changed, such as you’re much closer to retirement now, and are starting to think about spending your KiwiSaver, not just building it up. All of these are changes from your own life, not the world around you.

But changing based on the headlines usually means you’re reacting from fear, anger, or excitement. And those emotions are kryptonite to your money.

The biggest threat to your money often isn’t actually the sharemarket crash. It’s you, trying to avoid one.

The information in this article is general in nature and should not be read as personal financial advice.