Self-Select KiwiSaver: Is DIY Really Worth It?

Self-select KiwiSaver Schemes let you choose some or all of the investments in your KiwiSaver account, whether by mixing a provider's ready-made funds or by buying individual companies and exchange-traded funds yourself. Self-select can be worth using when it solves a specific problem the ready-made funds cannot.

Before choosing one, define the problem you want it to solve. If an ordinary fund, or a mix of two or three, already solves it, self-selection adds responsibility without a clear investment benefit.

Different types of self-directed KiwiSaver Schemes

Self-select KiwiSaver Schemes have no formal name and go by several labels, including self-service and self-directed schemes. Most have emerged in recent years, and we expect more to launch as KiwiSaver balances grow and more specialised needs arise.

Self-directed schemes come in several forms:

• Some let you mix the provider's diversified funds with single-sector funds, which invest in one asset class, such as global shares or cash.
• Others let you add individual shares and ETFs alongside a base fund.
• A few, such as the KiwiWRAP KiwiSaver Scheme, might loosely fit these criteria. They have the functionality to build a portfolio of direct holdings for each member, though this must be based on financial advice via an accredited financial adviser, including the team here at Become Wealth. This scheme has the highest average member balance by some margin, and is only available to those investing at least $50,000.

Schemes which allow you to pick individual investments set rules on how much of your investment portfolio your own picks can occupy. The rules differ between schemes and change over time, so read the scheme's product disclosure statement on the Disclose Register.

Is self-direction right for you?

Before you make any investment decision, you need to be clear on the outcome you want. Moving your KiwiSaver savings to a self-service scheme is no different. Reasons to do so might include one or more of the following.

Diversification between fund managers

Inland Revenue's rules allow membership of only one KiwiSaver Scheme at a time, so a member who wants more than one fund manager needs a scheme which offers several inside it. The reason to want more than one fund manager is concentration risk. Even well-regarded managers go through periods of poor performance. Their investment style can fall out of favour, key people can leave or a run of decisions can go wrong. A member with a single manager carries all of it. In our experience, for members with larger KiwiSaver balances, spreading money across managers can be a substantial consideration in its own right, rather than an attempt to outperform. The InvestNow KiwiSaver Scheme, for example, offered 45 funds from more than a dozen managers at 31 March 2026.

More managers do not automatically mean more diversified investments, because different managers often own many of the same companies. Compare the underlying holdings and investment styles, rather than counting manager names.

Ethical or similar reasons

A personal objection to a company, or even an entire industry, can be a valid reason to self-direct your KiwiSaver investment.

There are plenty of ESG (environmental, social and governance) funds on the market. These screened or ethical funds apply someone else's exclusions, which may be broader or narrower than yours. Choosing holdings directly is the most precise way to apply, then maintain, your own standards. Some schemes keep part of your balance in a base fund, though. There, your exclusion reaches only your own picks unless the base fund or funds screen out the same companies or industries.

Impact investing, which seeks a measurable social or environmental benefit alongside a financial return, also falls into this category. Though rare, some people want to invest only in niche areas, such as investing just in female-led companies.

Fund choice

Changing the overall mix of your savings is another reason people give, though it rarely needs a self-service scheme. The ready-made menu is large: members can choose from more than 326 KiwiSaver funds offered by at least 25 providers. Within your current scheme, the choice is limited to that provider's funds, but you can move to another scheme at any time.

Most providers let you split your balance between several of their funds, for example part in a growth fund and part in a conservative fund. Many also offer single-sector funds, such as one invested entirely in global shares. This sort of fund choice might suit a business owner whose wealth already sits in New Zealand property and a private company, and who may want retirement savings held mostly or entirely offshore. A global share fund does this, and is available in many ordinary schemes.

Personal enjoyment or excitement

Enjoyment is a legitimate reason to invest with a DIY approach. In our experience, people in this category perform best when they admit this to themselves, and psychologically accepting it can be an important step. Enjoyment alone does not necessarily make an approach speculative. Concentrated holdings, thin diversification and trading for excitement do, and money used in those ways is best treated as speculative.

"Some people like KiwiSaver self-select investments for their own enjoyment, which is great so long as that's openly the goal, and preferably if this sort of speculative wealth is set aside from what is usually a much larger amount of core wealth," says Vinessa Orsbourn, financial adviser at Become Wealth. "This means treating your own picks, whether inside or outside KiwiSaver, as speculative money, right-sized so a loss would sting without changing your retirement lifestyle," Orsbourn continues.

Separating the two keeps the speculative hobby apart from what might be considered core wealth: the sums dedicated to growing, then funding, major goals such as retirement. People who take this approach usually keep their speculation out of KiwiSaver altogether. KiwiSaver forms at least part of their core retirement savings, while any speculative money sits elsewhere, for instance on a share trading platform.

To beat the market

We include this reason for completeness, though statistically, self-directed investors are unlikely to beat the market consistently.

How self-directed investors fare overseas

New Zealand does not yet have any research or study about self-select KiwiSaver outcomes, so we need to look offshore for comparable retirement savings schemes data. Even there, the closest equivalents, such as AustralianSuper's Member Direct, which lets members hold shares directly, do not publish how their members perform. The most useful performance evidence instead comes from US brokerage records and fund flows, supported by British research into the confidence and motivations of self-directed investors. On average, the investors in the US studies earned less than the market or than the funds they held, with costs, timing and concentrated portfolios taking a larger bite.

A widely cited study by Barber and Odean followed 66,465 US brokerage households from 1991 to 1996. The average household held about four shares. After costs, the households trailed the market, earning 16.4 percent a year against its 17.9 percent. The most active fifth earned 11.4 percent after costs, against 18.5 percent for the least active. The authors attributed the excess trading to overconfidence.

Morningstar's Mind the Gap 2026 study measures a different cost: the timing of money going in and out. Over the 10 years to December 2025, the average dollar in US funds earned 8.7 percent a year, against 9.9 percent for the funds themselves. Put simply, the timing and size of investors' purchases and sales cost them about 1.2 percentage points a year, roughly an eighth of what their funds earned. Allocation funds, which hold several asset classes in one place, kept investors closer to the funds' returns than sector funds and alternatives, the categories which invite tinkering.

As an illustration of overconfidence, a 2021 survey for Britain's Financial Conduct Authority questioned 517 self-directed investors. More than four in 10 did not see losing money as a risk of investing. Some 78 percent trusted their instincts on when to buy and sell. The sample deliberately over-represented people investing in, or considering, high-risk products, so it describes one part of the self-directed market rather than all of it.

"We all like to think we're above-average drivers, but in reality, half of us are below average," says Jonny McNamee, financial adviser at Become Wealth. "With DIY investing, the numbers are even worse than driving: most people, no matter how smart or confident, cannot consistently beat the market."

The evidence leaves room for individual success. It does show self-direction adds more ways for costs, concentration and poor timing to erode returns. The reason for taking it on needs to be stronger than the hope of a slightly better result.

The dollar value of a better return

Most members moving to self-select schemes bring modest balances. Members who transferred into the Sharesies KiwiSaver Scheme in the year to 31 March 2026 brought an average of about $31,600 each.

Take a member who brings the Sharesies average and puts half of it, about $15,800, into their own picks. We use half because it is the most that scheme allows in a member's own picks. If the investor beats a comparable KiwiSaver fund by 1 percent over a year, after accounting for all trading and currency conversion charges, the gain is roughly $160. That 1 percent is a generous assumption given the overseas evidence, and a demanding one once every administration, transaction, fund and currency charge is counted.

Then there is the time. Doing this properly starts with extensive research before the first purchase, into each company and into what the base fund already owns. It continues with monitoring for as long as each holding remains, along with ongoing analysis of competitors and research into what else might belong in the portfolio.

Set against that effort, $160 a year is about $3 a week. Most households could find that by earning a little more or trimming household expenses, and both are within their control, while any stock-picking edge is uncertain and needs ongoing work. Most people are therefore far better off focusing on their main income and household budget. Either usually beats staying up late at night trying to self-manage a modest extra return on a KiwiSaver balance.

Habits which reduce the risks of self-selection

If you're still keen on investing and stock-picking via a self-directed KiwiSaver Scheme, the research and our own experience point to habits, rather than talent, as the main defence against costly mistakes. Self-directed investors who avoid those mistakes tend to share several of the habits below.

• They research extensively before the first purchase, including whether the base fund already owns what they plan to add. An S&P 500 fund added to a base fund with global shares can increase concentration in the same large US companies rather than add diversification.
• They trade rarely. Low turnover is the clearest finding in the US data, mainly because fewer trades mean fewer charges.
• They spread money across asset classes, rather than only across companies.
• They invest for a stated purpose rather than for excitement.
• They decide before buying what would justify selling, set a limit for each holding and review on a fixed schedule, rather than discovering their tolerance during a sharp fall.

Before you switch KiwiSaver Schemes

For many members, picking individual shares in a self-select scheme is a product engagement feature dressed up as an investment.

Before switching, identify your reason, then gauge it against the KiwiSaver menu you already have, which needs no ongoing decision-making. Your scheme, and the many others you could move to, offer hundreds of ready-made funds across every risk level. Each fund's quarterly update publishes its fees and long-run after-fee returns. If a single fund, or a mix of two or three, does the job, the case for picking individual shares might rest on enjoyment. Enjoyment of DIY investing can be a fine reason if you have deliberately separated speculative wealth from core wealth.

Larger financial gains are usually available elsewhere. They might come from ensuring your fund suits your timeframe, or from contributing more, whether to KiwiSaver or to investments outside it. Each offers a more dependable route to a better retirement than trying to pick winning shares in advance.

If you're unsure whether self-selection would add diversification or simply more holdings, a financial adviser from our team can help. A review of your KiwiSaver investment covers its underlying exposures, fees and fit with the rest of your wealth. Get in touch to book a complimentary initial consultation.