Savings To Investment Switch Calculator NZ 2026/27
The question people actually have is not whether investing beats savings on average, because it usually does and everyone knows it. The question is what happens if they move the money and the market falls the following month. Comparing expected returns does not answer that, because an expected return assumes away the only scenario anyone is worried about. This page tests the decision the way it deserves to be tested. It applies a fall immediately after the switch, then runs both paths forward, and reports the year at which the invested money gets back ahead of the money that stayed in savings. It then inverts the question and reports the size of fall your chosen horizon could absorb while still matching cash, which turns out to be the more useful number of the two. The result is not a view about markets. It is a statement about your horizon, and it tends to be decisive in both directions: at ten years or more the horizon absorbs the kind of fall that keeps people out of the market entirely, while at three years it absorbs almost nothing, and no expectation of returns changes that. The invested side is taxed properly according to what the fund holds, because a foreign shares PIE, a New Zealand and Australian shares PIE and an income PIE are taxed on completely different amounts and the net return is what has to close the gap.
Smooth invested path = amount × (1 + net return)years, where the net return is the gross return less the fund fee less tax.
Shocked path applies the fall in year one, then compounds the survivors at the net return: amount × (1 − fall) × (1 + net return)years − 1.
Recovery year is the first whole year in which the shocked path is at or above the cash path.
Fall your horizon absorbs = 1 − (1 + cash rate)years / (1 + net return)years − 1, the largest immediate fall that still leaves you level with cash at the horizon.
Foreign shares PIE (fair dividend rate). Tax is 5% of value × your PIR each year, which at a 28% PIR is 1.40% of the balance, and the actual gains are not taxed on top.
New Zealand and Australian shares PIE. Tax applies to dividends only at your PIR.
Income or bond PIE. The whole return after fees is taxable at your PIR.
Excluded: inflation, which affects both paths and does not change the crossover year; contributions and withdrawals; transaction and FX costs on entering the fund; and any recovery in the year the fall occurs.
Not financial advice. Last verified: .
Both paths, year by year
| Year | Stayed in savings | Invested, no fall | Invested, after the fall | Shocked vs savings |
|---|---|---|---|---|
| 1 | $30,502.50 | $31,590.00 | $24,000.00 | -$6,502.50 |
| 2 | $31,013.42 | $33,264.27 | $25,272.00 | -$5,741.42 |
| 3 | $31,532.89 | $35,027.28 | $26,611.42 | -$4,921.48 |
| 4 | $32,061.07 | $36,883.72 | $28,021.82 | -$4,039.25 |
| 5 | $32,598.09 | $38,838.56 | $29,506.98 | -$3,091.11 |
| 6 | $33,144.11 | $40,897.00 | $31,070.85 | -$2,073.26 |
| 7 | $33,699.27 | $43,064.54 | $32,717.60 | -$981.67 |
| 8 | $34,263.74 | $45,346.96 | $34,451.64 | $187.90 |
| 9 | $34,837.65 | $47,750.35 | $36,277.57 | $1,439.92 |
| 10 | $35,421.18 | $50,281.12 | $38,200.28 | $2,779.10 |
Shaded rows are the years the shocked path spends behind cash. The highlighted row is the crossover. The no-fall column is ahead from year one, which is why comparing expected returns alone never answers the real question.
How the recovery changes with the size of the fall
| Fall | Value straight after | Back ahead of cash | At year 10 | vs savings |
|---|---|---|---|---|
| 10% | $27,000.00 | Year 5 | $42,975.32 | $7,554.14 |
| 20% | $24,000.00 | Year 8 | $38,200.28 | $2,779.10 |
| 30% | $21,000.00 | Year 12 | $33,425.25 | -$1,995.94 |
| 40% | $18,000.00 | Year 17 | $28,650.21 | -$6,770.97 |
| 50% | $15,000.00 | Year 22 | $23,875.18 | -$11,546.01 |
The relationship is not proportional. The money has to make up both the fall and everything the savings path earned while it was recovering.
What each horizon can absorb
| Horizon | Fall it can absorb | Savings reaches | Invested reaches | Verdict |
|---|---|---|---|---|
| 3 years | 5.20% | $31,532.89 | $35,027.28 | Too short for growth assets |
| 5 years | 11.62% | $32,598.09 | $38,838.56 | Marginal |
| 10 years | 25.82% | $35,421.18 | $50,281.12 | Absorbs an ordinary bad start |
| 15 years | 37.74% | $38,488.76 | $65,094.88 | Absorbs a severe one |
| 20 years | 47.74% | $41,822.01 | $84,273.04 | Timing is not the issue |
This is the most useful row in the calculator. The tolerance collapses at the short end, which settles the question for near-term money without needing any view about markets.
Averages Answer The Wrong Question
Comparing an expected 5.30% against an after-tax 1.68% tells you investing wins, which you already knew. It does not tell you what happens if the fall comes first, and that is the only scenario stopping anyone from acting.
So this page starts there. The fall happens immediately, and the question becomes how long the horizon has to be for it not to matter.
Worked Example: $30,000, A 20% Fall On Day One
The $30,000.00 becomes $24,000.00 straight away, while the savings account carries on to $30,502.50 by the end of year one. The invested money is $6,502.50 behind.
It then compounds at 5.30% against the savings account's 1.68%, closing the gap by roughly three and a half percentage points a year.
It catches up in year 8, at $34,451.64 against $34,263.74. By year 10 it is $38,200.28 against $35,421.18, ahead by $2,779.10.
The no-fall path reaches $50,281.12 over the same period, so the fall costs $12,080.84 of the eventual balance. It does not cost the decision.
The Number That Actually Decides It
Turn the question around and ask how large a fall a horizon can absorb while still matching savings.
At 10 years the answer is 25.82%. At 15 years it is 37.74%, and at 20 years it is 47.74%, which is close to the worst falls in modern market history.
At 5 years it is 11.62%, and at 3 years it is 5.20%.
A 5.20% tolerance is not a margin at all. Falls of that size happen in ordinary weeks. That is the honest case for keeping short-horizon money in savings, and notice that it requires no forecast, no market view and no opinion about valuations. It follows from the horizon alone.
Waiting Is Not Free
The common response is to wait for a better moment, which the same numbers argue against.
A bad entry is a single event that a long horizon absorbs. Waiting is a recurring cost that compounds for as long as it continues, and the years given up at the start are the years that would have compounded longest.
On the worked example the smooth path is $14,859.94 ahead of savings by year ten. A year spent waiting does not remove the risk of a fall, it just removes a year of compounding and moves the same risk twelve months later.
Our cash drag calculator prices the waiting side of that trade directly.
Larger Falls Change The Answer
The recovery lengthens faster than the fall does, because the money has to make up both the fall itself and everything the savings path earned while it was recovering.
A 10% fall recovers in year 5. A 20% fall takes until year 8. A 30% fall takes until year 12, and a 50% fall until year 22.
A 10-year horizon survives the first two comfortably and does not survive the last two, which is worth knowing before rather than after. Test more than one fall size against your own horizon.
The Tax Basis Changes The Recovery
The net return is what closes the gap, so how the fund is taxed feeds straight into the recovery year.
A foreign shares PIE is taxed under the fair dividend rate on 5% of its value each year, which at a 28% PIR is 1.40% of the balance regardless of what it returned. A New Zealand and Australian shares PIE is taxed on dividends only. An income PIE is taxed on the whole return.
Applying your PIR to the entire return, which is the usual shortcut, understates the net return on a growth fund and makes the recovery look longer than it is. Our FIF calculator, FDR method covers the foreign investment rules properly.
What Should Not Move
Two categories fail this test by definition and should stay where they are.
The emergency fund, because it may be needed in exactly the year the fall happens, which is the one circumstance a long horizon cannot rescue. Our emergency fund placement calculator finds the least costly place to keep it.
Money with a date inside the horizon. A deposit, a known bill, a planned purchase. Setting the horizon to when you hope not to need the money rather than when you might is how a reasonable decision turns into a forced sale.
Related NZ Investment Calculators
- Cash Drag Calculator: what waiting costs while you decide.
- Emergency Fund Placement Calculator: where the money that should not move belongs.
- PIE Savings vs Bank Savings Calculator: getting the savings side taxed correctly.
- Fund Fee Drag Calculator: what the fee alone does over a long horizon.
- FIF Calculator, FDR Method: how foreign shares are actually taxed.
Related calculators
- Sell Shares to Buy a House vs Keep Calculator NZ: selling shares for a bigger deposit against keeping them and borrowing.
- Sharemilking Income Calculator NZ: Both Sides of a 50:50 or Variable Order.
- Shares vs Property Calculator NZ: Compare Long-Run Returns.
- Sharesies and Hatch FX Cost Calculator NZ: fees on US Shares.
How to decide whether your horizon is long enough to invest
- Enter only money with no claim on it. Exclude the emergency fund and anything with a known use inside the horizon. Money you might have to withdraw early is the one case where a bad start cannot be waited out.
- Set the horizon honestly. Use the point at which you would realistically want the money, not the point at which you hope not to need it. Overstating the horizon is what turns a reasonable decision into a forced sale.
- Set the cash side and its tax. The comparison is against what the money would have done in savings, after tax, which is a lower bar than the headline rate suggests but a real one.
- Set the fund return, fee and tax basis. Use a long-run expectation rather than a recent year, and pick the tax basis that matches what the fund holds, because a foreign shares PIE, a New Zealand and Australian shares PIE and an income PIE are taxed on completely different amounts.
- Choose a fall to test against. The default assumes the market falls straight after you invest, which is the scenario people actually fear. This is a stress test, not a forecast, and the point is to see whether the horizon can absorb it.
- Compare the recovery year with your horizon. If the recovery year is comfortably inside your horizon, timing is not the deciding factor. If it lands beyond it, the horizon is too short for the assets rather than the moment being wrong.