Is Simplicity the best KiwiSaver fund?

By   |   Verified by David Boyd   |   Updated 22nd July 2021

Simplicity NZ review
  • Simplicity is the only nonprofit KiwiSaver plan and operates through an online investment platform.
  • Simplicity offers ethical investment options and aligns itself with UN principles.
  • As a nonprofit, Simplicity minimizes transaction fees, charging only enough to cover its costs.

As the only nonprofit KiwiSaver plan, Simplicity is for those in New Zealand who want to save, invest, learn about finance, or borrow money. Their investment strategy is to invest passively across a wide range of asset classes and securities.

Who are they designed for?

Simplicity offers a range of solutions whether you are going through financial hardship or a first time home buyer. Their aim is to help Kiwis to not only get smarter with money but to make more money in an ethical way.

Ethical investing means they won’t allow you to invest in companies that have significant exposure to fossil fuel extraction or sectors like tobacco, weapons, alcohol, landmines, gambling, or adult entertainment. They also support UN principles when they invest, so if you're a customer, you won’t be able to invest in companies that breach UN principles.

Simplicity’s slogan is "Money = Choices = Dignity". As a result, they only charge fees to cover their costs and give 15% of their fee income to the Simplicity Charitable Trust.

Who owns them and are they safe?

Simplicity is a non-profit fund manager owned by the Simplicity Charity Trust. Simplicity NZ Limited is the issuer of the Simplicity KiwiSaver Scheme and the Simplicity Investment Funds.

They claim to be the only nonprofit KiwiSaver plan. Your money is held by a public government owned trust in a separate account, so if things went wrong with Simplicity, your money would still be safe.

How Simplicity works

Simplicity allows you to open a savings account or investment account. Although Simplicity also lends money, for the purpose of this review we will focus on the investment fund side of Simplicity.

It only takes a couple of minutes to set up an account with Simplicity. You need to verify your address and provide ID such as your NZ issued driver’s license or passport. Once Simplicity has verified these documents you’ll be able to invest by transferring funds to their custodian's bank account which is a government-owned public trust.

What can you trade with Simplicity?

They offer five different types of funds with differing levels of risk, including an international growth fund, an international balanced fund, an international conservative fund, a NZ Share fund, and NZ bond fund, with the last two being non-KiwiSaver funds. These investments are available both within and outside of KiwiSaver.

The growth, balanced, and conservative funds are diversified with more than 3,000 investments across 23 countries. The growth and balanced funds are more suited to you if you are comfortable with financial market volatility and want higher long-term returns. The conservative fund is lower risk and better for protecting capital but offering generally lower returns.

The NZ share fund solely invests in securities listed in the New Zealand stock exchange and the NZ bond fund invests in New Zealand government and investment grade bonds issued in New Zealand dollars or designed to be the New Zealand bond component of a diversified investment portfolio.

How are dividends handled?

All dividend payments are reinvested back into the funds and they do not make any distributions.

Fees

Simplicity does not charge members to join their KiwiSaver or Investment Funds. Their fees are $20 a year (you could consider this a subscription fee) plus an average 0.31% fee management fee. The NZ Share and Bond funds have an even lower 0.10% management fee p.a. If you hold more than one fund, you only pay one membership fee and for children under 18, membership is free.

Pros & cons

Pros

  • Offers internationally diversified and domestic NZ fund options with different levels of risk.
  • Ethical focus on conflict-free industries and supporting New Zealanders and NZ natural resources
  • Easy to use web app.
  • Useful forecasting tool projects returns based on investment in different fund types.
  • Video library and learning platform educates users on Simplicity and investing.

Cons

  • Minimum investment requirement of $1,000 for investment funds or 3% of your gross salary or wages for a KiwiSaver account.
  • Takes 3-4 working days for you to see your investment in your account.
  • Fund withdrawals may take up to 4 working days.

Alternatives

There are other investment providers such as InvestNow. However, what’s unique about Simplicity is the fact that they are a non-profit and ethically-oriented. Superlife is also ethical and principle-based, taking a similar approach to Simplicity while also offering solutions to employers.

FAQs

How old do you need to be to sign up for Simplicity?

To open an account with Simplicity you need to be 18 years old, however an under 18 can use Simplicity with a child’s account. This account must be set up by a parent or guardian that will manage the account for the child until they turn 18.

How do I deposit funds into my account?

After your initial deposit, you can add more funds via online banking. The details on how to deposit further funds into your account are available on their website FAQ.

What is the minimum deposit required?

The minimum investment is $1,000.

How long does it take to withdraw funds?

Once you submit a withdrawal request it takes 3 to 4 working days for the funds to arrive in your account.

How does Simplicity make money?

Simplicity is a not for profit organisation. To cover their day-to-day business expenses, they charge members a management fee of up to 0.31% per annum and a member fee of $20 per annum. Their aim is to pu more money in the pockets of their investors.

Verdict

If you are a new investor without the experience or time to invest, Simplicity is an excellent option to get started investing. With a choice of 5 international or domestic NZ funds, you can craft a portfolio that suits your risk preference. Simplicity’s non-profit focus means low fees so you can maximize your returns. Although they have a minimum investment requirement of $1000 or 3% of wages, their low fees and ethical focus means Simplicity provides a good value for investors.