KiwiSaver vs Term Deposit vs Shares Calculator

How this calculator works

All three columns start from the same balance and receive the same monthly contribution from you, so the comparison is a fair like-for-like one. Each month, the KiwiSaver balance adds your own contribution plus your employer's matching contribution, then grows at your selected annual return (already stated net of fees and after the top 28% PIR); once a year, the government contribution is added if you qualify. The share fund balance adds only your own contribution each month and grows at the same annual return, since it uses the same official FMA assumption and PIE tax treatment, but with no employer or government top-up. The term deposit balance adds only your own contribution each month and grows at your entered annual rate after Resident Withholding Tax at the rate matching your income tax bracket. All three use ordinary monthly compounding over your chosen number of years.

Worked example

Take someone earning $75,000 a year who contributes 3.5% of that a month ($218.75), already has $10,000 saved, and is projecting 20 years ahead at a Growth fund return of 4.5% a year. In KiwiSaver, their employer matches the same 3.5% ($218.75 a month, $52,500.00 over 20 years), and since their own contributions comfortably exceed the $1,042.86 needed each year, they receive the maximum $260.72 government contribution annually ($5,214.40 over 20 years). Compounding all of that monthly at 4.5% a year turns the $10,000 start into about $203,255.97, of which $120,214.40 is money in (their own contributions, the employer match and the government top-up) and $83,041.57 is investment growth. Putting the same $218.75 a month, with no employer or government contribution, into an identical PIE share fund earning the same 4.5% a year reaches about $109,775.25, of which $62,500.00 is money in and $47,275.25 is growth, over half of KiwiSaver's result, purely because of the missing employer and government contributions. Putting the same $218.75 a month into a term deposit at an example rate of 4.20% a year, taxed at this person's 30% RWT rate for an after-tax rate of about 2.94% a year, reaches about $89,513.00, of which $62,500.00 is money in and $27,013.00 is interest after tax, the lowest of the three, reflecting both the lower after-tax rate and no compounding advantage over a plain savings-style rate.

Why KiwiSaver usually wins on pure dollars, and why that is not the whole story

In this comparison, KiwiSaver's advantage comes almost entirely from money other than your own: the employer match and the government contribution, not from a better investment return, since the calculator deliberately applies the same FMA return assumption and PIR treatment to KiwiSaver and the comparable share fund. Strip out the employer and government contributions and the two would finish identically on the same monthly amount. What KiwiSaver does not offer is easy access: your balance is generally locked in until 65, other than a first-home withdrawal, significant financial hardship, permanent emigration, or serious illness, while a share fund or term deposit held outside KiwiSaver can usually be accessed whenever you choose. For money you might need before then, that access can matter more than the extra dollars.

How the tax treatment differs between the three

KiwiSaver and this calculator's Shares option are both modelled as portfolio investment entities (PIEs), taxed annually inside the fund at your prescribed investor rate (PIR): 10.5% up to $15,600 of income, 17.5% from $15,601 to $53,500, and 28% above that, capped at 28% however high your income. Term deposit interest is taxed differently, as ordinary income subject to Resident Withholding Tax (RWT) at the rate matching your income tax bracket, 10.5%, 17.5%, 30%, 33% or 39%, which can be considerably higher than the 28% PIR cap for anyone in the top two personal tax brackets. Direct NZ shares held outside a PIE work differently again: most personal long-term capital gains are untaxed, since New Zealand has no general capital gains tax, while dividends are taxed at your marginal rate less any imputation credits, and overseas shares above a cost threshold can fall under the separate foreign investment fund (FIF) rules. This calculator uses the simpler, more common PIE fund treatment for its Shares column so the comparison stays consistent and easy to follow.

What this calculator assumes

• A constant monthly contribution, employer match and annual return for the entire period; real pay rises, contribution changes and fund switches are not modelled.
• You are an eligible KiwiSaver member (generally aged 18 to the NZ Super qualifying age) contributing enough each year to receive the government contribution, which is removed once your income exceeds $180,000.
• The Shares column is a PIE-taxed managed fund or ETF held outside KiwiSaver, not a directly-held share portfolio, which is taxed differently again.
• The term deposit rate you enter stays constant for the whole horizon, whereas real term deposits are fixed only for their term and are typically renewed at a new rate on maturity.
• PIR and RWT are estimated from the annual income you enter using simplified brackets; confirm your own PIR with your fund provider if you are unsure.
• Figures are a projection based on the assumptions you enter, not a guarantee of future returns, and are not financial advice.

Who this calculator is for

This is for anyone deciding where extra savings should go, whether to increase KiwiSaver contributions, open a term deposit, or invest in shares outside KiwiSaver, and wanting to see the after-tax difference in real dollars rather than guessing. It suits employees weighing up a higher KiwiSaver contribution rate against other savings, and anyone who assumes a term deposit is automatically the safest place for extra cash without checking what the tax and lower return actually cost over time. If you want to check whether you are on track for the full annual government contribution, see our KiwiSaver Government Contribution Eligibility Calculator.

Frequently Asked Questions

Which is better, KiwiSaver, a term deposit or shares?

There is no single answer, it depends on your time horizon, income and how much access to the money you need. Using this calculator's own example figures, KiwiSaver ends up worth the most, about $203,255.97 after 20 years, mainly because of the employer match and government contribution rather than a higher return. An identical share fund without those extras reaches about $109,775.25, and a term deposit at an example 4.20% rate, after 30% RWT, reaches about $89,513.00. Enter your own numbers above for your personal comparison.

Why does KiwiSaver come out ahead in this calculator?

Mostly because of money that is not yours. KiwiSaver benefits from a matching employer contribution and up to $260.72 a year in government contributions, on top of the same monthly amount and return used for the share fund. Remove those two extras and the two would grow at the same after-tax rate on the same contributions.

What tax rate applies to term deposit interest?

Term deposit interest is subject to Resident Withholding Tax (RWT) at the rate matching your income tax bracket: 10.5%, 17.5%, 30%, 33% or 39%. This calculator works out your rate automatically from the annual income you enter, using the same brackets Inland Revenue uses for PAYE.

What is PIR and how does it affect KiwiSaver and PIE share funds?

The prescribed investor rate (PIR) is the tax rate applied each year inside a portfolio investment entity, which includes KiwiSaver funds and most managed share funds and ETFs. Based on your income it is 10.5% (income $15,600 or less), 17.5% ($15,601 to $53,500), or 28% (above $53,500), capped at 28%. This calculator's return assumptions already build in the top 28% PIR, so if your own PIR is lower your real result could be slightly higher than shown.

Can I lose money in KiwiSaver or a share fund but not in a term deposit?

Yes. A term deposit's rate is fixed for its term and backed by the bank, while KiwiSaver and share fund balances move with markets and are not guaranteed, even though this calculator uses a smooth constant return to keep the comparison simple. Longer horizons generally give investments more time to recover from a downturn.

Can I withdraw KiwiSaver before 65?

Generally no, other than a first-home withdrawal after 3 years of membership (leaving a minimum $1,000 in your account), significant financial hardship, permanent emigration, or serious illness. A term deposit or a share fund held outside KiwiSaver has no such lock-in.

Is the term deposit rate in this calculator official?

No. Bank term deposit rates are a market rate that changes often, so this calculator leaves that field blank rather than guessing one for you. Enter the actual rate you have been offered, or check a comparison site such as interest.co.nz for the current figure.

What if my shares aren't held in a PIE fund?

The tax treatment is different. Direct NZ shares held personally are usually not taxed on capital gains, since New Zealand has no general capital gains tax, though shares bought with a purpose of resale can be taxable. Dividends are taxed at your marginal rate less any imputation credits, and overseas shares above a cost threshold can fall under the separate foreign investment fund (FIF) rules. This calculator models the Shares option as a PIE fund for a simpler, consistent comparison.

Related calculators

• RWT Calculator: work out Resident Withholding Tax on any amount of interest at your own rate.
• Dividend Tax Calculator: imputation credits and any top-up tax on NZ share dividends held directly.
• Time to First $100,000 Calculator: how long the same contributions take to reach a single milestone.
• KiwiSaver Fee Drag Calculator: see what fees alone cost a balance over 30 years.
• KiwiSaver Government Contribution Eligibility Calculator: check whether your own contributions are on track for the full $260.72 top-up.
• Retirement Number Calculator: work out the total nest egg you need for your target retirement income.
• Term PIEs vs Term Deposits: the background to this calculation.

Official NZ sources

This calculator is built from primary New Zealand sources. Always confirm current figures against the official source for your situation:

• Inland Revenue (IRD): KiwiSaver contribution rates and government contribution rules
• Inland Revenue (IRD): finding your prescribed investor rate (PIR)
• Inland Revenue (IRD): resident withholding tax (RWT) on interest
• Financial Markets Authority (FMA): standard KiwiSaver return, fee and tax assumptions for projections