The big dipper
New Zealand Listener|July 2 - 8, 2022
KiwiSaver returns have plunged year. So what advice do the experts have about what lies ahead?
LAWRENCE WATT
The big dipper

By now, nearly three million people should have received their annual KiwiSaver statements. For some, it will be a useful reminder they're gradually building up a nest egg for their retirement. Others will be heeding the advice of various financial commentators that, for the sake of their mental wellbeing, it's best not to look right now.

Major disruptions including the Covid B pandemic and the war in Ukraine are wreaking havoc on international financial markets, where most KiwiSaver funds are invested. In the middle of June, one of the United States' best-known indices, the S&P 500, officially entered bear territory, which means it was down at least 20% from its most recent peak.

The last time we had a lengthy bear market was during the global financial crisis (it lasted 517 days), and before that was the Dotcom crash in the early 2000s (929 days). It's been fewer than 200 days since the S&P 500 last peaked, so it's entirely possible things could get worse before they get better.

Rocketing prices of everything from gas to groceries are complicating the picture. In New Zealand, inflation has hit a painful 6.9%, but in the US it has already hit 8.6%, and in the UK it is predicted to hit 11% by October. The World Bank has even raised the specter of stagflation - a nasty combination of low growth, high prices, and high unemployment. What does that feel like? Just ask anyone over 60.

In the 1970s, petrol prices were kept sky high by Arab oil states, following a series of regional wars. Financial markets were spooked so badly that the Dow-Jones index, adjusted for inflation, remained stagnant for more than a decade. Kiwis who lived through that time remember compulsory carless days, a wage and price freeze, and double-digit mortgage rates as the government desperately tried to stay in control.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM NEW ZEALAND LISTENERView all
First-world problem
New Zealand Listener

First-world problem

Harrowing tales of migrants attempting to enter the US highlight the political failure to fully tackle the problem.

time-read
3 mins  |
September 9, 2024
Applying intelligence to AI
New Zealand Listener

Applying intelligence to AI

I call it the 'Terminator Effect', based on the premise that thinking machines took over the world.

time-read
2 mins  |
September 9, 2024
Nazism rears its head
New Zealand Listener

Nazism rears its head

Smirky Höcke, with his penchant for waving with a suspiciously straight elbow and an open palm, won't get to be boss of either state.

time-read
2 mins  |
September 9, 2024
Staying ahead of the game
New Zealand Listener

Staying ahead of the game

Will the brave new world of bipartisanship that seems to be on offer with an Infrastructure Commission come to fruition?

time-read
4 mins  |
September 9, 2024
Grasping the nettle
New Zealand Listener

Grasping the nettle

Broccoli is horrible. It smells, when being cooked, like cat pee.

time-read
3 mins  |
September 9, 2024
Hangry? Eat breakfast
New Zealand Listener

Hangry? Eat breakfast

People who don't break their fast first thing in the morning report the least life satisfaction.

time-read
3 mins  |
September 9, 2024
Chemical reaction
New Zealand Listener

Chemical reaction

Nitrates in processed meats are well known to cause harm, but consumed from plant sources, their effect is quite different.

time-read
4 mins  |
September 9, 2024
Me and my guitar
New Zealand Listener

Me and my guitar

Australian guitarist Karin Schaupp sticks to the familiar for her Dunedin concerts.

time-read
2 mins  |
September 9, 2024
Time is on my side
New Zealand Listener

Time is on my side

Age does not weary some of our much-loved musicians but what keeps them on the road?

time-read
7 mins  |
September 9, 2024
The kids are not alright
New Zealand Listener

The kids are not alright

Nuanced account details how China's blessed generation has been replaced by one consumed by fear and hopelessness.

time-read
4 mins  |
September 9, 2024