Question:

KiwiSaver ... what a crock. KiwiSaver makes fortunes for other organisations and virtually nothing comes back to you in the end. Don't get suckered in to it.

Answer:

Mary Holm: I'm driven to conclude that KiwiSaver is like eating oysters - you love it or you loathe it. In both cases, though - and especially yours - the opinion seems to be based on some misunderstanding.

Firstly, politicians have nothing to do with KiwiSaver - other than passing it into law.

More importantly, you can do something pretty similar to what you are suggesting, but including KiwiSaver, and end up with considerably more money.

Before we go further, let's acknowledge that not many people - strong or not - would save half their income. Sure, many could save more than they think. If they lost their job and the only new one they could find paid considerably less, they wouldn't starve, which proves they could get by on less. But a 50 per cent spending cut is huge.

Anyway, at whatever level a person saves, I would strongly suggest they join KiwiSaver, contributing 2 per cent of their pay if they are an employee and up to $1043 a year if they are not. Government and employer contributions will more than double what they put in. That's where my plan beats yours.

If the person wants to invest in term deposits, as you suggest, some KiwiSaver cash funds invest in those plus other low-risk investments. More on that in the next Q&A.

You're obviously concerned that KiwiSaver providers charge fees. But for everyone over 18 there's no way that those fees will be anywhere near as high as the extra money coming in from the Government and employers.

If the person wants to make further savings, it's usually better to do that outside KiwiSaver. And your suggestion, of saving hard to pay off a house, and perhaps other property, is generally a good one.

One point, though. You seem to be suggesting rolling up money in term deposits until you can repay a mortgage in a lump sum. But as long as your mortgage interest rate is higher than term deposit interest - which is almost always the case - you will pay off a house faster if you put your savings directly into extra mortgage repayments.

Convinced? Somehow I doubt it. It sounds as if you deeply distrust financial institutions - except, for some reason, banks.

The fact is that the risk of losing money in a conservative KiwiSaver fund is probably much lower than the risk of dying in a car crash, and presumably you ride in cars. Still, it's your choice not to come for the KiwiSaver ride.

Mary Holm is the author of bestselling books on KiwiSaver and personal finance. She is also a highly praisedseminar presenter. Her written advice is of a general nature, and she is not responsible for any loss that any reader may suffer from following that advice.