KiwiSaver Funds for Young People: Fees, Returns, Options
Contents (9 sections)
- Why your KiwiSaver fund matters most when you're young
- Growth vs conservative: why time horizon trumps risk tolerance
- What to look for in a KiwiSaver fund in your 20s
- Top KiwiSaver growth funds for young New Zealanders
- The real cost of being in the default fund
- What about buying a first home?
- How much to contribute in your 20s
- Common questions
- What to do next
If you're in your 20s with 35+ years until retirement, a low-fee growth fund is almost certainly the right KiwiSaver choice. The data backs this up: over any rolling 20-year period in NZ and global markets, growth funds have outperformed conservative and balanced funds (Disclose Register, Sorted Smart Investor). Time is the single biggest advantage you have as a young investor, and a conservative or default fund wastes it.
Compare all NZ KiwiSaver growth funds to see fees, returns, and fund makeup side by side.
Why your KiwiSaver fund matters most when you're young
The fund you're in at age 22 has a far bigger impact on your retirement balance than the fund you switch to at 55. That's because of compounding: returns earn returns, and those returns earn returns, over decades. A small difference in annual returns early on snowballs into a massive difference at 65.
Here's what $5,000 in KiwiSaver at age 22 grows to by age 65, at different average annual returns after fees:
| Average annual return (after fees) | Balance at 65 | Difference vs 4% |
|---|---|---|
| 4% (conservative fund) | $27,400 | -- |
| 6% (balanced fund) | $57,200 | +$29,800 |
| 8% (growth fund) | $117,400 | +$90,000 |
That's a single $5,000 contribution. Now multiply the effect across 35+ years of ongoing contributions, employer contributions, and government contributions. The fund type you choose in your 20s is worth tens of thousands, possibly over $100,000, by the time you retire.
Growth vs conservative: why time horizon trumps risk tolerance
The standard advice is to pick a fund based on your "risk tolerance." That's not wrong, but it's incomplete. For young people, the more important factor is time horizon.
Growth funds invest mostly in shares (typically 70% to 90% equities). They go up more in good years and drop more in bad years. Over 1 to 5 years, they're volatile. Over 20 to 40 years, they've consistently outperformed lower-risk options.
| Fund type | Typical asset mix | 10-year average return (Disclose Register) | Typical annual fee |
|---|---|---|---|
| Defensive/Conservative | 80%+ bonds and cash | 3% to 5% p.a. | 0.3% to 0.8% |
| Balanced | ~60% shares, ~40% bonds | 5% to 7% p.a. | 0.4% to 1.0% |
| Growth | 70% to 90%+ shares | 7% to 9% p.a. | 0.3% to 1.1% |
The risk of being in a growth fund at 22 is that your balance might drop 20% to 30% in a bad year. That happened in 2020 and 2022. But here's what matters: if you're not withdrawing for 35 years, short-term drops are irrelevant to your final balance. What matters is the average return over the full period, and growth funds have consistently delivered higher averages over long horizons (Disclose Register, Sorted Smart Investor).
The real risk for a young person isn't a market crash. It's being in a conservative fund that returns 3% to 4% per year when you could be earning 7% to 9%.
What to look for in a KiwiSaver fund in your 20s
Three things matter most when choosing a growth fund as a young person:
1. Low fees. Fees are the only guaranteed drag on your returns. A fund charging 1.1% per year will cost you roughly $50,000 more in fees over 35 years on a $50,000 starting balance with $5,000 annual contributions than a fund charging 0.3% (Sorted Smart Investor). That's money that comes directly out of your retirement balance.
2. High growth allocation. Look for 80%+ in equities (shares). Some "growth" funds are only 65% to 70% equities, which is really a balanced fund with a growth label. Check the actual asset allocation on the Disclose Register or your provider's fund page.
3. Diversified global exposure. NZ is a tiny market. Funds with heavy NZ equity weightings (over 30% to 40%) are concentrated in a handful of companies. The best growth funds spread your money across thousands of companies globally, with a portion in NZ and Australian shares.
Top KiwiSaver growth funds for young New Zealanders
The following growth funds stand out on a combination of low fees, high equity allocation, and strong long-term returns. All data is from the Disclose Register and provider websites as at 1 March 2026.
| Provider | Fund name | Annual fee | Equity allocation | 5-year return (p.a.) | 10-year return (p.a.) |
|---|---|---|---|---|---|
| Simplicity | Growth Fund | 0.31% | ~88% | ~9.1% | ~8.5% |
| Kernel | High Growth Fund | 0.39% | ~100% | ~9.8% | N/A (launched 2019) |
| Milford | Active Growth Fund | 1.03% | ~85% | ~10.2% | ~9.4% |
| Fisher Funds (ex-Kiwi Wealth) | Growth Fund | 0.98% | ~80% | ~7.8% | ~8.1% |
| ANZ | Growth Fund | 0.74% | ~80% | ~8.2% | ~7.9% |
| ASB | Growth Fund | 0.56% | ~80% | ~8.6% | ~8.2% |
| Generate | Focused Growth Fund | 1.13% | ~90% | ~9.5% | ~8.8% |
A few things stand out in this data:
Simplicity Growth has the lowest fee of any growth fund at 0.31%. It's a passive, index-tracking fund. Over 35 years, that fee advantage compounds into tens of thousands of dollars saved compared to funds charging 0.8% to 1.1%.
Kernel High Growth is 100% equities with a low 0.39% fee. It's one of the most aggressive KiwiSaver funds available. It hasn't been around long enough for 10-year returns, but its short-term performance and low-cost passive approach make it notable for young investors with a long time horizon.
Milford Active Growth has delivered strong returns but charges 1.03% per year. On a $50,000 balance, that's $515/year in fees vs $155 at Simplicity. Whether active management delivers enough extra return to justify the fee difference over 35 years is the key question. Past outperformance doesn't guarantee future outperformance (FMA).
Generate Focused Growth has high equity allocation and solid returns, but its 1.13% fee is the highest in this group.
The real cost of being in the default fund
When you first start a job, if you don't choose a KiwiSaver fund, you get automatically enrolled in a default fund. Default funds are conservative or balanced funds, designed to protect short-term value rather than maximise long-term growth (FMA).
Here's what that default fund decision costs a 22-year-old on a $55,000 salary contributing 4%, with 4% employer contributions and $521 government contribution per year (using 4%, the rate from April 2028):
| Fund type | Assumed return (after fees) | Projected balance at 65 |
|---|---|---|
| Default/Conservative (4% return) | 4% | ~$320,000 |
| Balanced (6% return) | 6% | ~$490,000 |
| Growth (8% return) | 8% | ~$780,000 |
Assumptions: 2% salary growth, 4% employer contribution (after ESCT), $521 government contribution, returns are after fees. Figures are nominal.
The difference between a default fund and a growth fund over 43 years is roughly $460,000. Even between balanced and growth, the gap is approximately $290,000. Those are life-changing amounts that come entirely from choosing the right fund early.
If you're under 30 and still in a default fund, checking and switching is one of the highest-value financial decisions you can make. It takes about 15 minutes through your provider's website or by contacting a new provider to transfer.
What about buying a first home?
Many young Kiwis plan to use their KiwiSaver for a first home deposit. After 3 years of membership, you can withdraw your contributions, employer contributions, and investment returns (minus $1,000) for a first home (IRD). Government contributions stay in the account.
Does planning to buy a home change the growth fund decision? It depends on your timeline:
| Time until you buy | Suggested approach |
|---|---|
| 5+ years away | Growth fund. You have time to ride out short-term drops. |
| 3 to 5 years away | Growth or balanced. Consider the risk of a market downturn just before you buy. |
| 1 to 3 years away | Balanced or conservative. Protecting your deposit matters more than maximising growth. |
| Less than 1 year | Conservative. Don't risk a 20% drop right before settlement. |
If you're 22 and might buy a house at 30, that's 8 years in a growth fund before you'd consider switching. Those 8 years of higher growth can add meaningfully to your deposit. A common approach is to stay in a growth fund and switch to balanced or conservative 2 to 3 years before your expected purchase date.
You can switch funds at any time, for free, with most providers. Some switches happen within the same provider (just changing fund type), while others involve transferring to a new provider entirely.
See First home buyer guide for full details on using KiwiSaver for your first home.
How much to contribute in your 20s
The default employee rate is changing: 3% until March 2026, 3.5% from April 2026, and 4% from April 2028. Here's what different rates mean for someone earning $55,000 at age 22, contributing until age 65:
| KiwiSaver rate | Weekly take-home reduction vs 4% | Projected balance at 65 (growth fund, 8% return) |
|---|---|---|
| 4% | -- | ~$900,000 |
| 6% | ~$21 | ~$1,140,000 |
| 8% | ~$42 | ~$1,380,000 |
| 10% | ~$63 | ~$1,620,000 |
Assumptions: $55,000 starting salary, 2% growth, 4% employer match (from April 2028), $521 government contribution, 8% growth fund return after fees. Figures are nominal.
Moving from 4% to 6% costs about $21 per week and could add roughly $240,000 to your retirement. That's an extraordinary return for a relatively small weekly change. See KiwiSaver contribution rates for a full breakdown.
Common questions
What's the best KiwiSaver fund for someone in their 20s?
For most people in their 20s, a low-fee growth fund with high equity allocation (80%+) is the strongest option based on the data. Simplicity Growth (0.31% fee) and Kernel High Growth (0.39% fee) stand out for cost efficiency. Milford Active Growth has delivered higher returns but charges 1.03%. The best choice depends on whether you prefer passive indexing or active management (Disclose Register).
Is a growth fund too risky for a young person?
Over short periods (1 to 5 years), growth funds are volatile. Over 20 to 40 years, they've consistently outperformed conservative options. At 22 with 43 years until retirement, short-term volatility is irrelevant to your final balance. The bigger risk is being in a conservative fund and missing decades of higher returns (Sorted Smart Investor).
How do I switch my KiwiSaver fund?
If switching within the same provider (e.g., from ANZ Balanced to ANZ Growth), log in to your provider's website and change your fund type. It's usually instant. If switching to a new provider entirely, contact the new provider and they'll handle the transfer. It typically takes 10 to 35 working days. There's no fee to switch (FMA).
Am I in a default KiwiSaver fund?
If you never actively chose a fund when you started your job, you're likely in a default fund. Check your KiwiSaver statement or log in to your provider's website. Default funds in NZ are currently managed by six providers: BNZ, BT Funds Management (Westpac), Simplicity, Smartshares, Fisher Funds, and Booster (FMA). If you're in a "default" or "conservative" fund and you're under 30, it's worth reviewing.
Does it matter if I'm planning to use KiwiSaver for a first home?
Yes, but only in terms of timing. If you're 5+ years from buying, a growth fund still makes sense because you have time to recover from any short-term drops. As you get closer to buying (within 2 to 3 years), switching to a balanced or conservative fund protects your deposit. See First home buyer guide.
How much difference do KiwiSaver fees really make?
On a $50,000 balance with $5,000 annual contributions over 35 years, the difference between a 0.31% fee and a 1.1% fee is roughly $85,000 in total fees paid. That's money that comes directly out of your retirement balance. Lower fees don't guarantee better returns, but they guarantee less drag on whatever returns the market delivers (Sorted Smart Investor).
Can I have more than one KiwiSaver fund?
No. You can only have one KiwiSaver account with one provider. However, some providers (like Generate) let you split your balance across multiple fund types within their scheme. If you want exposure to both growth and balanced, check if your provider offers that option (IRD).
What if the market crashes right after I join a growth fund?
If you're 22, a market crash in your first year is actually helpful in the long run. Your ongoing contributions buy more units at lower prices, and you have decades for the market to recover and grow. The worst thing to do during a crash is switch to a conservative fund and lock in the loss. Time in the market matters more than timing the market.
What return can I expect from a KiwiSaver growth fund?
Over the past 10 years, NZ KiwiSaver growth funds have averaged roughly 8% to 9% per year after fees (Disclose Register). That's not guaranteed going forward. Returns will vary year to year, and future decades may be higher or lower than the past. For planning purposes, 5% to 8% after fees is a reasonable range for long-term projections.
When is a growth fund not right for a young person?
If you're planning to withdraw your KiwiSaver within 1 to 3 years (for a first home, for example), a growth fund carries real risk of a short-term drop at the worst time. Also, if market volatility genuinely causes you to lose sleep and panic-switch funds, a balanced fund that you actually stick with will outperform a growth fund you abandon after the first crash.
What to do next
- Compare all NZ KiwiSaver funds side by side on fees, returns, and asset allocation
- Understand KiwiSaver fund types to know the difference between growth, balanced, and conservative
- Check your KiwiSaver contribution rate and see the impact of increasing it
- Learn about KiwiSaver fees and how they compound over time
- Read the first home buyer guide if you're planning to use KiwiSaver for a house deposit
Last updated: 28 March 2026. Sources: Disclose Register (disclose-register.companiesoffice.govt.nz), IRD (ird.govt.nz), FMA (fma.govt.nz), Sorted Smart Investor (smartinvestor.sorted.org.nz), provider websites. Fund returns are historical and not a guarantee of future performance. This is educational content, not financial advice.
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This is educational content, not financial advice.