KiwiSaver is one of the best long-term savings tools available to New Zealanders. Regular contributions, employer contributions for many employees and the power of long-term investing make it an excellent foundation for building wealth.

But for many people, KiwiSaver shouldn’t be their only investment.

One of KiwiSaver’s greatest strengths is also one of its biggest limitations. In most cases, your money is locked away until you’re eligible to withdraw it for a first home or until you reach the qualifying retirement age. That makes KiwiSaver ideal for long-term retirement savings, but it may not be suitable for every financial goal along the way.

Many people also want to save for things they’ll need access to before retirement. Whether it’s upgrading to a larger home, helping children through university, taking a career break, starting a business or simply building long-term wealth outside KiwiSaver, a managed fund can offer greater flexibility while still providing the benefits of professional investment management.

Managed funds work in a very similar way to KiwiSaver. Your money is pooled with other investors and invested across a range of assets such as shares, property, fixed interest and cash. Depending on the type of fund you choose, your investment can be tailored to suit different timeframes and levels of risk, just like KiwiSaver.

The key difference is accessibility.

Unlike KiwiSaver, managed funds generally don’t have the same legislative withdrawal restrictions. While they’re still designed to be long-term investments rather than short-term savings accounts, investors can usually access their money when they need it, subject to the terms of the particular fund. That flexibility makes managed funds a popular option for people who want to grow their wealth while retaining access to their investments if their circumstances change.

Another benefit is that managed funds allow people to continue investing once they’re already making the maximum KiwiSaver contributions they’re comfortable with. If you’re already contributing enough to receive employer contributions and any available government support, a managed fund can provide another way to continue building wealth without locking additional money away until retirement.

Like KiwiSaver, managed funds benefit from one of the most powerful concepts in investing: compound returns. Regular contributions, combined with long-term investment growth, can have a significant impact over time. The earlier you begin investing, the more opportunity your money has to grow.

Of course, investing always involves risk. The value of investments will rise and fall over time, and no investment can guarantee positive returns. That’s why it’s important to understand your investment timeframe, your tolerance for market fluctuations and what you’re investing towards before choosing any investment.

For many New Zealanders, KiwiSaver and managed funds don’t compete with each other—they complement each other. KiwiSaver can provide a strong foundation for retirement, while managed funds can help you work towards other financial goals throughout your life.

If you’ve never looked into managed funds before, it’s worth taking the time to understand how they work and whether they could play a role in your overall financial journey.