NZ Savers Going Backwards on Bank Term Deposits and KiwiSaver

New Zealanders who keep their emergency funds in bank term deposits may be going backwards, as inflation is outpacing interest rates. According to a chart compiled by Simplicity chief economist Shamubeel Eaqub, six-month term deposit rates have not offered returns above inflation since the 1970s.

The Reserve Bank data shows that during the Covid years, people with money in a six-month term deposit were on average going backwards, but not as much as during the high-inflation times of the 1970s. Currently, the return above inflation is very marginal.

Another issue facing savers is the negative returns from KiwiSaver providers over short periods. A listener's balance in a Milford moderate/conservative KiwiSaver fund fell by $1,400 over seven months, with a six-month return of -0.45 percent. The one-year return for the fund is 1.12 percent after fees.

In related news, the principal trustee at Public Trust, Michelle Pope, advises that even those with family trusts need a will to deal with assets still in their personal name and any debts owed by the trust. Online wills services can be convenient and cost-effective for straightforward situations, but may not cater for complex circumstances.